Preamble

The House met at a Quarter before Three of the Clock, Mr. SPEAKER in the Chair.

DEATH OF A MEMBER.

Mr. SPEAKER made the following communication to the House:

I regret to have to inform the House of the death of Sir Louis William Smith, Knight, late Member for the Hallam Division of Sheffield, and desire to express our sense of the loss we have sustained and our sympathy with the relatives.

PRIVATE BUSINESS.

Kirkcaldy Corporation Order Confirmation Bill,

Read the Third time, and passed.

Oral Answers to Questions — INDIA (OFFICERS' HOUSING, PESHAWAR).

Mr. Day: asked the Under-Secretary of State for India whether he will give particulars of the number of additional quarters and/or bungalows that have been made available for officers and their families for housing purposes in the Peshawar district of the North-West Frontier Province of India during the last two years; and whether the shortage of housing accommodation for officers in this district still continues?

The Under-Secretary of State for India (Lieut.-Colonel Muirhead): I am asking the Government of India for particulars, and will communicate with the hon. Member on their receipt.

Mr. Day: Are complaints still being received with regard to those houses?

Lieut.-Colonel Muirhead: We have asked the Government of India for in-

formation on the matters raised by the hon. Member's question, which I think include that point.

Oral Answers to Questions — SPAIN.

Mr. Cocks: asked the Prime Minister whether His Majesty's Government have obtained particulars of the State law in regard to political responsibilities promulgated by General Franco's Government on 13th February; and what action he now proposes to take to secure humane treatment of prisoners, seeing that under that law it is a punishable offence to have taken any public part in the elections of February, 1936, except on behalf of the Right, to have opposed the national movement since 18th July, 1936, or to have had any connection with trade unions or political parties supporting the Republican régime?

The Under-Secretary of State for Foreign Affairs (Mr. Butler): I would refer the hon. Member to the reply which I gave to the hon. Member for Aberdeen, North (Mr. Garro Jones) on 9th March, to which I have as yet nothing to add.

Mr. Cocks: When does the Undersecretary expect to get the information?

Mr. Butler: I hope soon and I will inform the hon. Member when we do.

Brigadier-General Sir Henry Croft: Is it not a fact that the 2,500,000 citizens who remain in Catalonia are well satisfied with the justice of the treatment served out?

Mr. Vyvyan Adams: asked the Prime Minister whether he has any further statement to make about the condition of the refugee camp at Perpignan?

Mr. Dobbie: asked the Prime Minister the amount of the grant made by the Government to the British Red Cross Society to aid them in their work for Spanish refugees on the French frontier; and whether the Red Cross Society is working in co-operation with the French Government in the matter?

Mr. Butler: His Majesty's Government are contributing £50,000 to the British Red Cross Society for the relief of the Spanish refugees interned in the camps in South-Eastern France, and Major-General Sir John Kennedy and Major-


General F. C. Fitzgerald, who are supervising this work in close co-operation with the French authorities, are now at Perpignan, where the distribution of material has already begun. I understand that there are definite improvements both in feeding and hospital conditions in the camps.

Miss Rathbone: asked the Prime Minister whether he is aware that the British steamship "Stangate" was captured outside Valencia on Thursday; and what steps have been taken to secure the release of the ship?

Mr. Butier: I understand that this ship was arrested by a unit of the Spanish fleet within territorial waters in the vicinity of Valencia, and it was subsequently ascertained by the British naval authorities that this arrest had been effected within the three-mile limit. The ship was conducted to Palma by the Spanish naval authorities, where she arrived on the morning of 17th March. The ship had entered Spanish territorial waters in disregard of a notice issued by the Spanish Government prohibiting shipping from doing so. His Majesty's Government do not propose to object in cases where the Spanish Government, after prohibiting the entry of ships into certain portions of its territory, prevent, by appropriate measures taken in territorial waters, the entry of ships into the closed ports.

Miss Rathbone: Does not this attitude mean the recognition of blockade by General Franco and, therefore, the recognition of belligerent rights; and would the right hon. Gentleman further tell us about the safety of those on the ship, and has he any information that that is assured?

Mr. Butler: The position with regard to territorial waters was made quite clear by my Noble Friend the other day, and has been stated by me to the House. With regard to the last part of the question, we have sent a message to our representative at Palma asking him to do all he can to look after the safety and interests of the crew.

Mr. Benn: Does the right hon. Gentleman remember what happened to the "Stangrove," when she was left for 14 days on the rocks and the captain died?

Major-General Sir Alfred Knox: Can my right hon. Friend state the name of the owners of this ship?

Mr. Butler: I think, Messrs. Billmeir.

Miss Rathbone: asked the Prime Minister on how many occasions and at what cost to the British Treasury were refugees in sympathy with the insurgent forces removed from Spanish ports in British warships during the first two years of the Spanish war; and in how many of these cases was the consent asked for or obtained from the then recognised Spanish Government?

Mr. Butler: No statistics are available to show on how many occasions refugees were removed from Spanish ports, nor the cost of such evacuation to His Majesty's Government, These evacuations were carried out with the consent of the then Spanish Government.

Miss Rathbone: Are we to understand that that condition was always carried out by the Spanish Government?

Mr. Butler: I understand that to be the case.

Mr. W. Roberts: Can the right hon. Gentleman say why, if that is the case, the Republican Government were so much more reasonable in connection with this than General Franco's Government?

Oral Answers to Questions — LEAGUE OF NATIONS COVENANT.

Mr. David Grenfell: asked the Prime Minister whether the Protocol opened for signature by the League of Nations Assembly affirming the independent existence of the League Covenant, and its consequent separation from the treaties of peace, has been signed by His Majesty's Government; and when it will now come into force?

Mr. Butler: The Protocol was signed on 30th September, 1938, on behalf of Great Britain and Northern Ireland and all parts of the British Empire which are not separate Members of the League of Nations, and the instrument of ratification by His Majesty the King, in respect of the United Kingdom of Great Britain and Northern Ireland, was deposited with the Secretariat of the League of Nations on 20th January, 1939. The Protocol will come into force, in accordance with the provisions of Article 26 of the


Covenant, when ratified by the Members of the League whose representatives compose the Council and by a majority of the members of the League whose representatives compose the Assembly,

Oral Answers to Questions — HELIGOLAND.

Mr. Day: asked the Prime Minister what reports he has received relating to the fortification of Heligoland by Germany in contravention of the terms of Article 115 of the Treaty of Versailles?

Mr. Butler: As was stated by the then Foreign Secretary in reply to a question by my hon. Friend the Member for Kensington, South (Sir W. Davison), on 29th July, 1936, the island of Heligoland was already being fortified at that time. According to our information, the fortification of the island has been completed.

Mr. Day: Have any representations been made to Germany on this subject?

Mr. Butler: It was not thought that this was a matter which should be taken up separately with the German Government. The action was unilateral and was taken by Herr Hitler following his repudiation of the Articles relating to disarmament in the Treaty of Versailles.

Oral Answers to Questions — CZECHOSLOVAKIA.

Mr. Arthu Henderson: asked the Prime Minister whether His Majesty's Government contemplate granting de jure recognition to the German Government's annexation and control of the territories formerly forming part of Czechoslovakia, namely, Bohemia and Moravia?

The Prime Minister (Mr. Chamberlain): His Majesty's Government will require to give full consideration, in concert with other Governments, to all the consequences of German action against Czechoslovakia before any statement can be made on the question of recognition.

Mr. Henderson: Is the British Legation in Prague still to receive diplomatic immunity, more especially in view of the fact that a large number of British citizens have taken refuge in the Legation?

The Prime Minister: Perhaps the hon. and learned Member will put that question down.

Mr. Wedgwood Benn: In the meantime, what is the position of the Czech Legation here?

The Prime Minister: I am afraid the right hon. Gentleman must put that question down.

Mr. Ede: asked the Prime Minister what reports reached him from Prague or elsewhere, on or prior to 6th March, 1939, that it was the confirmed belief of the people of Prague that the Germans would march into Prague on 15th March; and what inquiries he made in Berlin and Prague on such reports?

Mr. Butler: There is, so far as I am aware, no basis for the assumption made in the first part of the question. The second part of the question does not, therefore, arise.

Mr. Ede: Has the right hon. Gentleman's attention been drawn to a statement made by Mr. Edwards, a member of the executive of the Miners' Federation of Great Britain, and published in a London paper on 6th March, that it was the confirmed belief of the people of Prague, from whence he had just returned, that Hitler's troops would march in on 15th March?

Mr. Butler: I have not seen that, but if the hon. Member will bring it to my notice, I shall be very glad to look at it.

Mr. Ede: Are we to understand that a statement published in the London Press on the subject was not known to the British Intelligence Service? Are these things concealed from the wise and prudent of the Foreign Office, and revealed only to the "Daily Worker "?

Mr. Butler: I have no doubt that the wise and prudent of the Foreign Office noticed it, but it did not happen to come to my notice.

Lieut.-Commander Fletcher: Has the right hon. Gentleman's attention been called to a statement made in the French Chamber by the French Foreign Secretary that he indicated something on the subject to His Majesty's Government about nth March?

Mr. Butler: I will inquire into the point which the hon. and gallant Member has brought to my notice.

Mr. Noel-Baker: asked the Prime Minister how many pieces of artillery, tanks, and military aircraft have passed from the Czecho-Slovak Army into the possession of the German Army?

Mr. Butler: I am not in a position to supply detailed information on these points.

Mr. Noel-Baker: Has the right hon. Gentleman received a report, attributed to the French General Staff, that there are 3,000 guns, 2,000 tanks, and 1,500 modern aircraft?

Mr. Butler: Yes, Sir, I have seen that report.

Mr. A. Henderson: asked the Prime Minister whether he has been informed of the terms of the ultimatum delivered by Herr Hitler to President Hacha on 15th March; and what representations have been made by His Majesty's Ambassador in Berlin, following the intervention of the German Government in the internal affairs of Czecho-Slovakia?

Lieut.-Commander Fletcher: asked the Prime Minister whether it has now been decided to call home His Majesty's Ambassador at Berlin to report on the situation, or whether the Ambassador has been instructed to make any representations to the head of the German Government regarding the German annexation of Czecho-Slovakia?

The Prime Minister: I am circulating in the OFFICIAL REPORT the text of the Agreement signed on 15th March between Herr Hitler and the President of the Czecho-Slovak Republic. So far as I am aware, no written ultimatum was presented to Dr. Hacha prior to his acceptance of this Agreement. His Majesty's Ambassador in Berlin was instructed on 17th March to inform the German Government that His Majesty's Government desired to make it plain to them that they could not but regard the events of the past few days as a complete repudiation of the Munich Agreement and a denial of the spirit in which the negotiators of that Agreement bound themselves to co-operate for a peaceful settlement. Sir Nevile Henderson was also instructed to say that His Majesty's Government must take this occasion to protest against the changes effected in Czecho-Slovakia by German military action, which are,

in their opinion, devoid of any basis of legality. His Majesty's Ambassador has now been recalled to London to report on the situation.

Mr. Henderson: Has the Prime Minister's attention been drawn to a statement in the Press that Herr Hitler threatened to send his air squadrons to bomb Prague unless the President of Czecho-Slovakia accepted his demands?

The Prime Minister: I have seen such reports.

Following is the text:

Translation of the text of the Agreement signed on 15th March by Herr Hitler and Herr von Ribbentrop on behalf of Germany and by Dr. Hacha and Dr. Chzalkovsky on behalf of Czechoslovakia:
The Führer to-day in the presence of the Reich Minister for Foreign Affairs, Herr von Ribbentrop, received the Czecho-Slovak President, Dr. Hacha, and the Czecho-Slovak Minister for Foreign Affairs, Dr. Chzalkovsky, at their request in Berlin. At the meeting the serious situation which had arisen as a result of the events of the past week on what was hitherto Czecho-Slovak territory was closely and frankly examined. Both sides gave expression to their mutual conviction that the aim of all efforts in this part of Central Europe should be the safeguarding of calm, order, and peace. The Czecho-Slovak President declared that in order to serve this purpose, and in order to secure final pacification, he placed the destiny of the Czech people and country with confidence in the hands of the Führer of the German Reich.
The Führer accepted this declaration and expressed his determination to take the Czech people under the protection of the German Reich and to guarantee to it an autonomous development of its national life in accordance with its particular characteristics.

Mr. A. Henderson: asked the Prime Minister whether, in view of the recent annexation of Czecho-Slovakia by the German Government, His Majesty's Government contemplate consultation with other Governments adhering to the principles of the League Covenant and the Kellogg Peace Pact, with a view to securing common measures of defence against unprovoked aggression?

The Prime Minister: The whole situation is at present under review by His Majesty's Government.

Miss Rathbone: asked the Prime Minister whether arrangements have been, or will be, made to avoid a repetition of


the great congestion which occurred at the Legation and Consular offices in Vienna after the annexation of Austria by providing a substantial increase in staff and accommodation at Prague for dealing with visas, passports, etc.?

Mr. Butter: The necessary arrangements are being made, and further increases in staff are under consideration.

Lieut.-Commander Fletcher: asked the Prime Minister whether the premises of His Majesty's Legation at Prague still enjoy extra-territoriality; what is the position of British subjects who have sought refuge in the Legation; and how their evacuation from the territory formerly known as Czecho-Slovakia will be effected?

Mr. Butler: The answer to the first part of the question is in the affirmative. His Majesty's Government are endeavouring to arrange with the German authorities for such British subjects, other than the staff of His Majesty's Legation, who are at present living in the Legation, to be allowed to return to this country without hindrance.

Mr. Thorne: asked the Prime Minister whether he can give any information concerning the suicide of the honorary British Vice-Consul at Brno, Czechoslovakia?

Mr. Butler: I have been asked to reply. Yes, Sir. I much regret to say that Mr. Walter Neumark, British Vice-Consul at Brno, committed suicide on 16th March. It is known that Mr. Neumark had been in poor health for some time and was suffering from depression, and it would seem probable that the strain of recent events aggravated his condition.

Mr. Thorne: Is the right hon. Gentleman aware that a number of important people committed suicide on the same day?

Mr. Butler: I regret to say that we have had that report.

Miss Wilkinson: Did this gentleman not apply recently for British naturalisation? Has there been any delay?

Mr. Butler: He applied for British naturalisation two days previously.

Lieut.-Colonel Sir A. Lambert Ward: asked the Chancellor of the

Exchequer what steps he intends to take to safeguard the interests of the bondholders, and others, who are owed money by the late Czecho-Slovak Government?

Miss Wilkinson: asked the Chancellor of the Exchequer whether he has any further statement to make as to the release of the gold reserves of the bank of the late kingdom of Czecho-Slovakia to the present controllers of the finances of the new State?

The Chancellor of the Exchequer (Sir John Simon): The House is already aware of the action taken with regard to Czechoslovak gold or balances held by the Bank of England, and I must now further report to the House that on Friday last the Bank of England, at my request, informed banks and other financial institutions in this country which hold balances, securities or gold on behalf of the former Czecho-Slovak Government, the National Bank of Czecho-Slovakia, or any other persons in the former Czecho-Slovak Republic that His Majesty's Government consider that it is desirable that they should not make any payments from such balances, or part with securities or gold without the assent of the Treasury. Legislation is required to validate compliance with this request, and to secure that the institutions concerned are effectively indemnified. The necessary Bill will be introduced immediately.

Miss Wilkinson: May I ask whether people who have balances in the Bank of Czecho-Slovakia and who are now refugees in this country and in France will be able to. withdraw any of their money if they can prove that they had balances in the Bank of Czecho-Slovakia?

Sir William Davison: Can the Chancellor of the Exchequer inform the House whether it is the case that German military lorries have removed £25,000,000 sterling from the Bank of Czecho-Slovakia to Berlin?

Sir J. Simon: I cannot answer the last question because I do not know. With regard to the question of the hon. Lady, that is one of the considerations which is now being looked into. This is a complicated matter, and I think for the moment that the thing to do is to secure an effective embargo.

Mr. Petherick: May I ask whether, pending the legislation to which my right hon. Friend has referred, the various banking institutions in this country have agreed to the suggestion of His Majesty's Government not to pay out any money of the former Szecho-Slovak Government?

Sir J. Simon: I feel confident they will comply with the request.

Mr. G. Strauss: Is it possible for the right hon. Gentleman to say what are the gold reserves of the Czecho-Slovak Bank in this country, or balances held over here?

Sir J. Simon: No, I cannot say that.

Mr. Bellenger: Will the legislation apply to branches of foreign banks in London as well as to British banks?

Sir J. Simon: I am obliged to the hon. Gentleman for raising that point. I will look into it. I do not think I can answer it now.

Lieut,-Commander Fletcher: If there are claims by the German Government upon Czech assets in this country other than bank deposits, will they similarly be resisted?

Sir J. Simon: I think the practical thing for the moment is being done. It deals with gold, securities and balances which might otherwise be moved from institutions in this country. That is the practical thing to do.

Oral Answers to Questions — ABYSSINIA.

Sir Percy Harris: asked the Prime Minister whether he has any information as to how many natives.in Abyssinia are being trained for military duties?

Mr. Butler: Numbers of natives in Italian East Africa are undergoing military training for purposes of local policing and territorial defence, but it is impossible to give any figures.

Oral Answers to Questions — WEI-HAI-WEI (OPIUM).

Sir John Haslam: asked the Prime Minister whether he is aware that during the whole of the British lease of Wei-hai-wei, from 1898 to 1930, the port and surrounding district was entirely free from the opium evil and continued so until the Japanese occupation, and that since the

Japanese took over the port many opium dens have been opened; and whether he will draw the attention of the Japanese Government to the grave consequences of permitting opium dens to exist and increase in the Chinese territories in their occupation?

Mr. Butler: Yes, Sir, and the question is at present under consideration.

Sir J. Haslam: Is it not the case that this matter has been brought to the notice of the Japanese authorities? Has any reply been received?

Mr. Butler: Yes, Sir. We understand, as I have previously informed the House, that the Japanese authorities are giving the general matter consideration.

Oral Answers to Questions — CENTRAL EUROPE.

Mr. Gallacher: asked the Prime Minister whether, in view of recent happenings in Central Europe, he is taking any special steps to obtain at the earliest possible moment better information as to political events and conditions in one or more of the Governments of Europe, in view of their probable effect on British interests?

Mr. Butler: No, Sir. His Majesty's Government are satisfied with their present sources of information in Central Europe.

Mr. Gallacher: In view of the serious situation in Europe would it not be in the best interests of the country that those who have all along believed in collective security should now have control of the Government of this country?

Oral Answers to Questions — ARMAMENTS (RAW MATERIALS).

Mr. A. Edwards: asked the Prime Minister to what extent the manufacture of armaments in Germany, Italy and Japan, is dependent on supplies of materials from the British Empire and the United States of America, respectively; and whether he is now prepared to advocate a limitation of armaments throughout the world by a limitation of supplies of raw materials from the British Empire and the United States of America?

Mr. Butler: It is impossible to give a reliable estimate such as the hon. Member desires, and I doubt whether the particular proposal of the hon. Member would have the effect he desires.

Mr. Edwards: Is the Minister prepared to try it?

Mr. Butler: I am always prepared to investigate it.

Mr. Edwards: Is it not true that the armaments which Germany, Italy and Japan have at present are very largely manufactured out of goods supplied from the British Empire and America, and is the Minister not prepared to take steps immediately to stop it?

Mr. Butler: The hon. Member raises a broad question. I am prepared to investigate it. I cannot say anything more now.

Mr. T. Williams: Has the right hon. Gentleman seen a letter in the "Times "this morning advocating this policy?

Mr. Butler: Yes, I have read that letter.

Mr. Edwards: In view of the unsatisfactory nature of the reply, I beg to give notice that I will raise the matter on the Motion for the Adjournment.

Oral Answers to Questions — LIBYA (ITALIAN FORCES).

Lieut.-Commander Fletcher: asked the Prime Minister what reply has been received by His Majesty's Chargé Affaires in Rome to his further representations concerning the strength of the Italian forces in Libya?

Mr. Butler: The Counsellor at His Majesty's Embassy in Rome had a further conversation with the Italian Minister for Foreign Affairs on 16th March. The position remains unchanged.

Lieut.-Commander Fletcher: Is it the case that the position as regards the Italian troops in Libya at present constitutes a breach of the terms of the Anglo-Italian Agreement?

Mr. Butler: We have debated this question and have had questions and answers on it a great number of times, and I do not think that I can add anything to what I have said.

Sir Archibald Sinclair: When the right hon. Gentleman says that the position is unchanged, does he mean that the number of Italian troops in Libya remains at 60,000, as on the last occasion?

Mr. Butler: It remains as I last stated it.

Oral Answers to Questions — MEMEL.

Mr. Noel-Baker: asked the Prime Minister whether he can make a statement concerning the present situation in the Memel district of Lithuania?

Mr. Butler: Conditions in the Memel-land have not appreciably changed since my reply to the hon. Member for Wolver-hampton, East (Mr. Mander) on 1st February, but the present situation is being closely watched.

Mr. Noel-Baker: Has the right hon. Gentleman seen the statement of the leader of the Germans in the Memel territory, that the time has now come when they must return to the Reich?

Mr. Butler: Yes, Sir, I have seen that statement, and I have said that the situation is being closely watched.

Mr. Benn: Has he also noticed the formation of Storm Troopers in Memel-land?

Mr. Butler: I have noticed all those matters.

Mr. Gallacher: What are you doing?

Oral Answers to Questions — BRITISH SUBJECTS, SHANGHAI.

Mr. Moreing: asked the Prime Minister whether he is aware that Mrs. Charles Sherwin, a British subject now in Shanghai, has, during several weeks past, repeatedly applied to the Japanese consular, naval, and military authorities for permission to rejoin her husband in Hankow, and has been consistently refused; and what action he is taking in the matter?

Commander Marsden: asked the Prime Minister whether he is aware that a large British company in Shanghai recently applied to the Japanese authorities on the Yangtze for permits for six of their employés to go to Hankow, four British and two Americans; that the permits were granted for the Americans but refused for the British; whether he has inquired why this discrimination was made; and what action he is taking to secure proper treatment for this British company?

Mr. Butler: My Noble Friend is making inquiries about these cases.

Oral Answers to Questions — NAVAL AND MILITARY PENSIONS AND GRANTS.

Mr. Gallacher: asked the Minister of Pensions (1) the number of ex-servicemen over 60 years of age who are in receipt of pensions, and the total sum paid out to them;
(2) whether in order to avoid elderly ex-servicemen being driven to supplement their pension by resort to the public assistance committee, he will consider introducing legislation to regard all pensioned partially disabled ex-servicemen of 60 years of age or over as being totally disabled, and grant them pensions at the appropriate rate?

The Minister of Pensions (Mr. Ramsbotham): In reply to the first question. I would remind the hon. Member that I gave him the figures he requires in my answer to him of 27th February. The suggestion made 'in the second question that all ex-servicemen of 60 years of age and upwards, who are in receipt of partial disability pensions, should be regarded as totally disabled and pensioned accordingly would, I am satisfied, be so contrary to the facts as to be unjustifiable.

Mr. Gallacher: In view of the fact that there are not so many of them left now, would it not be a gesture of consideration of the services they have given if they were put into a position that they did not have to go and seek out relief: and is it a desirable thing that those who were acclaimed as heroes during the War should now be put into the position of having to seek Poor Law relief?

Mr. Ramsbotham: The hon. Member's supposition is not correct. The majority of the men of this age-group are, I am glad to say, of comparatively low assessment. Two-fifths have only minor disabilities assessed at 20 per cent. or less.

Mr. T. Smith: asked the Minister of Pensions whether having regard to the difficulty pensioners have at times in getting signatures on life certificates witnessed by a responsible person, he will add to the list of persons authorised to attest signatures members of rural, urban district, borough and county councils?

Mr. Ramsbotham: The classes of persons who may attest life certificates is prescribed by Treasury warrant. The

list of such persons covers already a very wide field, and I have no evidence that pensioners are inconvenienced in procuring the necessary attestation.

Mr. Smith: If I send the hon. Gentleman evidence and particulars of this sort of thing, will he look into the matter?

Mr. Ramsbotham: Yes, Sir, I certainly will.

Oral Answers to Questions — IMPERIAL INSTITUTE, KENSINGTON (BOARD OF GOVERNORS).

Mr. Duncan: asked the Secretary to the Overseas Trade Department whether the seat allotted to the Dominion of Canada on the Board of Governors of the Imperial Institute, Kensington, which according to the annual report of the Institute for 1938 was vacant, has now been filled; and if so, by whom?

The Parliamentary Secretary to the Board of Trade (Mr. Cross): I have been asked to reply on behalf of the Secretary of the Department of Overseas Trade, who is the responsible Minister for the Imperial Institute. The vacancy in question has not yet been filled.

Mr. Duncan: Is it likely to be filled in the near future, in view of the importance of encouraging the Dominions to take part in this work?

Mr. Cross: I cannot give my hon. Friend any information on that subject, but we should very much welcome it if the Government of Canada were willing to co-operate.

Oral Answers to Questions — TRADE AND COMMERCE.

RUMANIA (COMMERCIAL MISSION).

Mr. Bellenger: asked the Secretary to the Overseas Trade Department whether any decision has yet been reached regarding the dispatch of a trade mission to Rumania?

The President of the Board of Trade (Mr. Oliver Stanley): It has been decided to send a commercial mission to Rumania, but the detailed arrangements have not yet been made.

Mr. Bellenger: Does the right hon. Gentleman realise that this matter has been under the consideration of his Department for some weeks; and does he think that, in view of the serious economic demands


which have been made on Rumania by Germany, it is worth while sending a British trade mission now?

Mr. Stanley: It is one of the best arguments for sending it.

Mr. Lawson: Will it go at an early date?

Mr. Stanley: I have said that the detailed arrangements and the personnel are not yet concluded.

Mr. J. Morgan: Will the commission be empowered to negotiate on the output of the oilfields of Rumania on behalf of British interests?

Mr. Stanley: I cannot add anything to what I have said.

MINISTER'S VISITS, FOREIGN CAPITALS.

Mr. Pilkington: asked the Prime Minister whether, in view of the German incorporation of Czecho-Slovakia, he will add military representatives to the present delegation visiting Warsaw and Moscow to discuss matters of mutual interest?

The Prime Minister: No, Sir. As already stated, the objects of my right hon. friend's journey are economic and have been arranged to accord with a timetable.

Oral Answers to Questions — AGRICULTURE.

ALLOTMENTS.

Mr. Ellis Smith: asked the Minister of Agriculture whether he can now make a statement on the case presented to him by the National Allotment Society; and what steps is it proposed to take to encourage the allotment movement and to secure more land for permanent allotments and assist local authorities where necessary?

The Minister of Agriculture (Colonel Sir Reginald Dorman-Smith): The main proposals put forward by the National Allotments Society are based on the provision of financial assistance by the Exchequer towards the purchase of land for allotments by local authorities and allotment associations. Inasmuch as Parliament has entrusted to urban local authorities ample powers to provide allotments, including those governing the compulsory acquisition of land and financial assistance from the rates, the

Government cannot see its way to introduce legislation on the lines suggested by the society. In announcing this decision, I would desire to emphasise the value and importance of allotments in the general scheme of local administration, and to urge local authorities to make the fullest use of their powers to extend the allotment movement. My Department will continue to do everything possible to encourage local authorities in the direction of providing more allotments on a permanent basis in order to satisfy the demands of those of their residents who wish to make good use of their spare time by providing food for themselves and their families from the cultivation of small plots of land.

Mr. R. Acland: Are we to understand that the Government are really not going to do anything to prevent the very deplorable practice of all sorts of councils taking over allotment land for housing schemes, schools, and all kinds of purposes?

Sir R. Dorman-Smith: The matter is in the hands of the local authorities.

Mr. Acland: Do the Government propose to do nothing to alter the present position? If that is so, I understand that the answer is "Yes."

Sir R. Dorman-Smith: The Government can urge the local authorities to exercise their powers.

Miss Wlikinson: Does not the Minister realise that the whole problem is, that the local authorities do exercise their power, which is to take back the land and that is what we want to stop?

Sir R. Dorman-Smith: It is for the local electors to educate their local authorities in the matter.

Mr. Macquisten: How can the right hon. Gentleman expect the local authorities to act honestly when they use the Public Authorities Protection Act to defraud people?

FEEDING STUFFS (PRICES).

Mr. De la Bère: asked the Minister of Agriculture whether, in view of the operations of the price-fixing associations which exist and which have resulted in producers being charged unreasonably high prices over a long period, he will take steps in forthcoming legislation to


give financial facilities and encouragement to bodies such as the National Poultry Council, the Milk Marketing Board, and the Bacon Development Board to purchase feeding stuffs and wheat offals direct from the growers and producers?

Sir R. Dorman-Smith: While I appreciate the motive underlying my hon. Friend's question, I doubt whether in every case mentioned by him it would be appropriate for the bodies to engage in the supply of feeding stuffs to their members. Provision is, however, made in the Agricultural Marketing Acts to enable a board to buy and to sell to registered producers anything required for the production of a regulated product, and it is for the boards concerned to make such use of this provision as they think fit.

Mr. De la Bère: Does my right hon. and gallant Friend not realise the far-reaching and adverse effect on the dairy farmers and pig producers of the high cost of feeding stuffs, and can he say what steps he intends to take to stop this absolute scandal that has been going on for years?

Sir R. Dorman-Smith: I am always glad to have my hon. Friend's observations. It is in the hands of the marketing boards for them to carry out.

Mr. George Griffiths: Does not this arise out of the tariff policy of the Government?

Sir R. Dorman-Smith: No, Sir.

Mr. Griffiths: Look at it again.

Sir Joseph Nall: Does my right hon. Friend appreciate the fact that since the marketing boards were first instituted, public opinion has changed and would now welcome a tariff policy?

MILK MARKETING.

Mr. T. Williams: asked the Minister of Agriculture whether he is aware that E. Hodson, a small farmer of Fish lake, near Doncaster, has, since 1934, signed every form, supplied all the information asked for, informed the inspectors of the Milk Marketing Board at least twice each year of his activities, from time to time has sought advice and guidance from the inspectors to ensure compliance with the wishes of the board, but has now been find £250 for evasions in the years 1935

and each successive year; and will he refer the details of this case to the committee inquiring into the question of fines and penalties?

Sir R. Dorman-Smith: Since the producer concerned in this case has exercised his right to refer the matter of the penalty to arbitration, it would, I feel, be proper to regard the matter as sub judice for the present.

Mr. Williams: Will the right hon. and gallant Gentleman comply with the request in the latter part of the question, that is, to submit the details of this case to the committee dealing with fines and penalties?

Sir R. Dorman-Smith: I doubt whether the committee could now look into it, because they have almost completed their report, which I am expecting in a very short time.

Mr. Williams: Will the right hon. and gallant Gentleman undertake to inform the Milk Marketing Board that this gross imposition on a small farmer, retrospective for four years, is the kind of thing which will bring the Milk Marketing Board into bad odour all over the country?

Sir R. Dorman-Smith: I have no doubt that they will take notice of the hon. Member's remarks.

Mr. Macquisten: Is it not a monstrous thing for the Milk Marketing Board to be the judge in its own court? Why are not these men allowed a right of appeal to the ordinary courts of law?

Mr. Macquisten: asked the Minister of Agriculture whether he is aware that the Milk Marketing Board is demanding and exacting levies on producer-retailers of milk and using these levies, or part thereof, to make up the standard price to those who are not producer-retailers; and what is the amount of the levy per gallon?

Sir R. Dorman-Smith: Under the Milk Marketing Scheme registered producers in England and Wales are required to pay contributions to the board's fund in respect of milk produced and sold by them by retail or semi-retail; these contributions, which are credited to the appropriate regional pools, represent the producer-retailers' share of the cost, inter alia, of administering the scheme, of the


accredited bonus, and of the loss falling upon all producers on account of the sale of milk for manufacture. The reply to the second part of the question contains a tabular statement, and with my hon. Friend's permission I will circulate it in the OFFICIAL REPORT.

Mr. Macquisten: Why does not the right hon. Gentleman answer the question, whether some of this levy is being used to give to other milk producers? It is a monstrous thing to take one man's earnings and hand them to another. I want to ask the right hon. Gentleman this definite question. Is it not a fact that in a case which was taken to the House of Lords it was clearly decided that it was grossly illegal to take the earnings of one man and give them to another? There is not a word about this in the answer.

Following is the statement:

Rates of the contributions payable by producer-retailers.


Description of Milk.
Rate per gallon.


Category I—Tuberculin Tested Milk
⅜d.


Category II—Accredited Milk
⅝d.


Category III—Milk other than milk in Categories I, II and V
1⅝d.


Category V—Accredited Milk produced from an Attested Herd
⅜d.

NOTE.

1. The above rates are reduced by ¼d. per gallon if payment is made together with payment of all arrears of contributions (if any) within 14 days after the relevant accounting day.

2. The rates are increased by ½d. pergallon on all retail or semi-retail sales of a producer who sells any milk by wholesale (except on contracts carrying a level delivery premium).

Oral Answers to Questions — UNEMPLOYMENT.

AGRICULTURAL WORKERS (INSURANCE).

Mr. J. Morgan: asked the Minister of Agriculture in how many county areas it will be possible for unemployed farm workers to draw weekly benefits in excess of the minimum wage rates for those areas as at present determined under the Government's recently-announced proposals with regard to unemployment insurance for farmworkers?

Sir R. Dorman-Smith: In the areas of three of the 47 agricultural wages committees it will be possible for an unemployed agricultural worker to become entitled to total weekly benefits in excess of the weekly minimum rates of wages at present in operation for ordinary adult male workers.

Mr. Morgan: Does the Minister intend to make representations to the country committees concerned, drawing their attention to this possibility with a view to raising the minimum?

Sir R. Dorman-Smith: It is in their own hands to do that if they consider that the circumstances justify it.

Mr. Morgan: Is the Minister prepared to countenance a man who is out of work in agriculture drawing more money than a man in work?

Sir R. Dorman-Smith: I am aware of that, and naturally one is trying to make it possible for wages to go up.

TRANSFEREES.

Mr. James Griffiths: asked the Minister of Labour whether he is aware of the increasing unemployment among workmen transferred by his Department from the depressed areas to the South of England, and, in particular, to the number unemployed due to the decline in the building trades; and whether he is taking steps to assist these transferees to find new work, or, failing that, if assistance will be granted them to move back to their original homes?

The Parliamentary Secretary to the Ministry of Labour (Mr. Lennox-Boyd): I have no information which would suggest that workers who have transferred from areas of heavy unemployment to the South of England have been specially affected by any decline in employment that may have occurred in particular districts. The normal service of the Employment Exchanges for finding work for the unemployed is available for transferees on the same basis as for other workers. If they find employment in their home areas the usual facilities for advance of fares are given.

Oral Answers to Questions — POST OFFICE.

TELEPHONES AND TELEGRAPHS (OUTER HEBRIDES AND ISLES).

Mr. Malcolm MacMillan: asked the Postmaster-General whether he will consider granting financial assistance for the provision of automatic exchanges in the villages of the Outer Hebrides for the convenience of the local people, medical services and holiday visitors?

The Postmaster-General (Major Tryon): An extensive programme for providing


telephonic communication between the various villages in the Hebrides and between the islands and the mainland is already in hand. The scheme has been designed to give the best arrangements for serving the localities from the point of view referred to by the hon. Member, and comprises either standard or small rural type automatic equipment served from three manual switching centres. The scheme will result in considerable financial loss, and I regret that I am not prepared to enlarge its basis.

Mr. MacMillan: asked the Postmaster-General whether he will make a statement on the recent improvements in telephone and telegraph communications in the Outer Isles of Scotland; and on the proposed improvements for this year?

Major Tryon: There has been a marked improvement in the telephone service between the islands of Lewis and Harris and the mainland since the radio telephone channels were brought into use on the 1st of this month. As regards telegraph communication, arrangements are in hand to provide, by means of the radio telephone channels, an emergency link which can be utilised in the event of a breakdown in the submarine cable between the island of Lewis and the mainland. It is anticipated that the islands of Barra and South Uist will be connected to the mainland by radio telephone by July this year and that service will be extended to the islands of Benbecula and North Uist early in 1940. The hon. Member will, I am sure, be pleased to hear that the special cable charges on telephone calls to the Western Islands will be abolished as from 1st April next.

Mr. MacMillan: I thank the right hon. Gentleman for a very helpful reply.

AUTOMATIC TELEPHONE EXCHANGES, LONDON.

Sir Alfred Beit: asked the Postmaster-General when the Victoria telephone exchange, London, will become automatic; and when the conversion of the whole Metropolitan area will be completed?

Major Tryon: The Victoria telephone exchange will, it is hoped, be converted to automatic working next May. The conversion of the London telephone system, within a radius of 10 miles from Oxford

Circus, will, in accordance with the present programme, be completed by about 1944.

Sir A. Beit: Is my right hon. Friend satisfied with this rate of progress, which is a great deal slower than in other countries?

Major Tryon: On the contrary, the telephone developments in this country have been better than in any other country recently.

NATIONAL SERVICE (CANCELLATION POSTMARK).

Mr. Day: asked the Postmaster-General whether he will consider providing a cancellation post-mark which will call attention to the need for more recruits for the National Service campaign?

Major Tryon: There are difficulties in the way of adopting the hon. Member's suggestion, but I will certainly give it careful consideration.

Mr. Day: Can the right hon. Gentleman say on what occasion a similar cancellation has taken place?

Major Tryon: We do it in certain cases, but these stamps go all over the world, and the hon. Member's question suggests that our National Service plan is not going well which is neither accurate nor a good thing to advertise.

Mr. Logan: Affix on the stamp, "Lick the stamp, lick the enemy."

WEST AFRICAN AIR MAILS.

Mr. Petherick: asked the Postmaster-General whether the air mail from Gambia is still carried in German aeroplanes; and what arrangements he is making for all air mails from British West Africa to be carried in British aeroplanes?

Major Tryon: The answer to the first part of the question is in the affirmative. As regards the second part, air mail correspondence between this country and Nigeria and the Gold Coast, which represents about 90 per cent. of the total air mail correspondence to and from the West African Colonies, is already carried in British aircraft on the main Empire route between the United Kingdom and Khartoum, and by a British air service between Khartoum, Lagos and Accra. Air mail correspondence to and from Sierra Leone is carried by a British air service between Freetown and Bathurst,


where is connects with the German service to and from Europe. When a direct British air service is available between the United Kingdom and West Africa it is the intention to use it for the carriage of first class mail on an "all-up" basis. As regards this proposed service I would refer my hon. Friend to the reply given on 8th February by my hon. and gallant Friend the Under-Secretary of State for Air to a question by my hon. and gallant Friend the Member for Hertford (Sir M. Sueter).

Mr. Petherick: Does my right hon. and gallant Friend agree that all British mails for the British Colonies ought to be carried in British aeroplanes?

Colonel Sandeman Allen: Does not the air mail from Nigeria come via Khartoum?

Major Tryon: The difficulty is that we have to use a foreign service where there is not a British service available. I hope soon it will be done by British services.

Oral Answers to Questions — SECRETARIES OF STATE (HOUSE OF LORDS).

Mr. V. Adams: asked the Prime Minister whether he will so amend the constitution as to enable peers who are Members of His Majesty's Government to speak on the Floor of the House of Commons and so to be directly answerable to the elected representatives of the British electorate?

The Prime Minister: I would refer my hon. Friend to the answer which I gave on 14th March last year in regard to a similar question by my hon. Friend the Member for Cheltenham (Mr. Lipson).

Oral Answers to Questions — DEFENCE.

PROGRAMME.

Mr. Benn: asked the Prime Minister whether he intends to propose a revision of the National Defence programme in view of the acquisition by Germany of the war material and munitions factories in Czecho-Slovakia?

The Prime Minister: As I stated in my speech at Birmingham on Friday last, every aspect of our national life must now be reviewed from the angle of national safety; this statement, of course, covers the National Defence programmes.

Miss Wilkinson: May I ask whether this includes any representations to the Iron and Steel Federation of this country that pig iron and scrap iron should not be sold to Germany as was sold in the last War?

The Prime Minister: I think that might be called an aspect of our national life and safety.

ARMAMENT MANUFACTURE (PROFITS).

Mr. Bellenger: asked the Chancellor of the Duchy of Lancaster whether his attention has been drawn to the Defence Purchasing Bill introduced in the Canadian House of Commons which, among other provisions, seeks to limit armament profits; and whether he is prepared to introduce similar legislation in this country?

Sir J. Simon: I have been asked to reply. I am informed by the Dominions Office that a Bill dealing with defence purchases was introduced recently in the Canadian House of Commons. I do not know whether this is the Bill to which the hon. Member refers, as copies have not yet been received in this country.

Mr. Bellenger: Will the Chancellor of the Exchequer acquaint himself at an early date with the provisions of this Bill, as he may find it useful to himself in the near future?

Sir J. Simon: I shall be glad to do that.

Oral Answers to Questions — SMOKE ABATEMENT (LIVERPOOL).

Mr. Kirby: asked the Minister of Health whether the London Midland and Scottish Railway Company have yet started their series of experiments in methods of firing locomotives; if so, what are the nature and results of such experiments; and what effect has been produced towards mitigating the smoke nuisance in the central area of Liverpool?

The Minister of Health (Mr. Elliot): I am informed that these experiments are now in progress and are being carried out in conjunction with measurements by the Liverpool Town Council of the state of the atmosphere at tunnel openings. Until the experiments are completed it will not be possible to assess their result.

Oral Answers to Questions — REGISTRAR-GENERAL'S RETURNS.

Sir George Mitcheson: asked the Minister of Health whether he is aware of the long delays which occur in connection with the publication of information based upon censuses of the population and of production, and that the Registrar-General's Decennial Supplement relating to occupational mortality in 1931 was published only this month; and whether having regard to the importance of returns of this, and a similar, kind, both in respect of administration and legislation, steps can be taken in future for their more rapid publication?

Mr. Elliot: The Registrar-General's Decennial Supplement, which was published in October last, is part of a series which cannot be taken in hand until the reports for the previous census have been completed, and I can assure my hon. Friend that every effort is made to secure the publication of the Registrar-General's statistical reports at as early a date as possible. The time between the census of production and the publication of the results has been progressively lessened at each of the last two censuses, and I understand from my right hon. Friend the President of the Board of Trade that some further improvement may be possible at the next census.

Oral Answers to Questions — AIR-RAID PRECAUTIONS,

Mr. Thorne: asked the Lord Privy Seal whether he is aware that if a man's income does not exceed £250 per annum the family is entitled to a free air-raid shelter; why a man with an income that exceeds that amount, if he has one or two children, must pay for the shelter; that in some cases the income of the family may exceed the £250, even although the father's income may be smaller; whether a man who earns £260 and has to maintain two small children must pay for the shelter; and what action he intends taking about the matter?

The Lord Privy Seal (Sir John Anderson): The standard which has been adopted for the free distribution of these shelters was fixed after very careful consideration and is, in my opinion, a generous one. I would point out that it covers all manual workers, whatever their earnings, and that where the income limit

is applicable, that is in the case of non-manual workers, it takes account only of the earnings of the householders. I am afraid that no course intermediate between making everyone pay and universal free distribution would have avoided the sort of comparisons made in the question, and I can hold out no expectation that the decision will be reopened.

Mr. Garro Jones: Will the right hon. Gentleman be good enough to say on what principle preference is given to a manual worker over a clerical worker with less income?

Sir J. Anderson: The principle is the principle embodied in the National Insurance Act.

Mr. Kirby: Is the right hon. Gentleman aware that clerical workers are fed up with the line which is drawn in these matters?

Mr. Lathan: Is the right hon. Gentleman aware that a special committee set up to inquire into these matters recommended that this discrimination should be abolished?

Sir J. Anderson: I am not aware of that.

Oral Answers to Questions — ACCIDENT, EARL'S COURT EXHIBITION.

Mr. Thorne: asked the Secretary of State for the Home Department whether he can give any information in connection with the accident at Earl's Court Exhibition, on Wednesday, 15th March, when two men were crushed to death; and whether he can state the cause of the accident?

The Under-Secretary of State for the Home Department (Mr. Geoffrey Lloyd): My right hon. Friend understands that an excavation had been made for the purpose of underpinning a concrete base carrying a steel stanchion. The lower part of the concrete base parted and fell on the only workman who was working in the excavation. I regret to say that this man was killed. Two other men were treated for shock. The inquest is being opened to-day and it is not possible at present to make any further statement as to the cause of the accident.

Oral Answers to Questions — CZECH REFUGEES, GREAT BRITAIN.

Sir P. Harris: asked the Home Secretary whether generous and sympathetic consideration is given to all applications from Czechs, now resident in this country,to continue their stay in the light of present conditions?

Mr. Lloyd: My right hon. Friend fully appreciates the considerations which the hon. Member has in mind, and while each case will have to be considered individually and regard must be paid to the question whether an applicant has been admitted for a temporary stay with a view to proceeding overseas, the hon. Member can be assured that there will be no question of sending back to their own territory any Czechs who have a claim as refugees for protection.

Mr. Leach: Will this rule be made applicable in all other persecution areas?

Oral Answers to Questions — GOVERNMENT CONTRACTS (EMPLOYMENT).

Mr. Pilkington: asked the Chancellor of the Exchequer whether he will take steps to ensure that in future all Government contracts shall stipulate employment of personnel through the recognized exchanges?

Sir J. Simon: The following clause is already inserted in all Government contracts with firms in Great Britain and Northern Ireland:
The contractor shall notify the appropriate Employment Exchange as and when any additional labour is required to carry out this contract. Contractors are not precluded from seeking to obtain workpeople by other means also but they are requested to inform the Employment Exchange without delay of any vacancies so filled.
The question whether any modification is necessary is at present under consideration.

Oral Answers to Questions — WAR RISKS (COMPENSATION AND INSURANCE).

Sir G. Mitcheson: asked the Chancellor of the Exchequer whether he will institute inquires for the purpose of ascertaining to what extent the recent decline in building plans approved by the local authorities is attributable to uncertainties in respect of the scheme of war-risk insurance?

Sir J. Simon: The decline in the cost of building plans approved by local authorities dates from the high level of 1936, and it is clear that the risk of damage in a possible future war can be only one of several factors which have caused the decline. The 1938 figure though lower than in the three previous years was higher than in any year before 1934 and nearly 50 per cent. higher than the average of 1924 to 1929. The figures for individual months are not very important, but in fact the cost of plans approved in February, 1939, was about £2,000,000 greater than in January, 1939, and about £500,000 greater than in February, 1938. In all the circumstances I do not think that any useful purpose would be served by instituting the inquiries suggested by my hon. Friend.

Mr. Hicks: Is it not true to say that the plans which have been approved are largely Government work and not the type of house referred to in the question?

Sir J. Simon: I think the hon. Member's observation is probably true. No doubt that is a material factor influencing the total amount given.

Mr. Hicks: In the interests of the trade generally should not this matter be further considered to see how far encouragement can be given to building and thus to employment?

Mr. Simmonds: May I ask whether the Chancellor of the Exchequer is reviewing the policy of the Government in this matter?

Sir J. Simon: It is a matter of importance and is constantly under consideration. The statement I made some time ago was a carefully prepared statement and was itself the result of an elaborate review.

Oral Answers to Questions — OLD AGE PENSIONERS (PUBLIC ASSISTANCE).

Mr. Dobbie: asked the Minister of Health whether he will inform the House as to the number of persons in receipt of old age pensions in Rotherham; and the number of those who are in receipt of allowances from the public assistance committee?

Mr. Elliot: I regret that the information asked for in the first part of the question


is not available, as the records of old age pensioners are not kept on a territorial basis. On 1st January, 1939, there were 920 old age pensioners in Rotherham in receipt of out-relief.

Oral Answers to Questions — EUROPEAN SITUATION.

Mr. Attlee (by Private Notice): asked the Prime Minister whether he can make any statement on the European situation?

The Prime Minister: The House will be aware from the speech that I made in Birmingham on Friday of the serious view which His Majesty's Government take of the events of the last week. The situation created by these events is engaging the urgent attention of His Majesty's Government, who are also in communication with other Governments.

Mr. Attlee: May I take it that the Prime Minister will make a full statement to the House at the earliest opportunity?

The Prime Minister: Yes, Sir. I certainly will do that.

Mr. Leach: Can the Prime Minister say with how many other Governments he has communicated?

BILL PRESENTED.

CAMPS BILL,

"to promote and facilitate the construction, maintenance and management of camps of a permanent character," presented by Mr. Elliot; supported by Mr. Colville, Mr. Bernays, Mr. Scrymgeour Wedderburn, and Mr. Lindsay; to be read a Second time To-morrow, and to be printed. [Bill 91.]

BUSINESS OF THE HOUSE.

Motion made, and Question put,
That this day, notwithstanding anything in Standing Order No. 14, the Report of Navy Supplementary Estimates, 1938, and the Reports [23rd February and 7th March] of Civil Estimates, Supplementary Estimates, 1938, may be considered, and Business other than the Business of Supply may be taken before Eleven of the Clock, and that the Proceedings on the Reports of Supply of 16th March, 23rd February, and 7th March may be taken after Eleven of the Clock, and that the Proceedings on Government Business be exempted, at this day's sitting, from the provisions of the Standing Order (Sittings of the House)." —[The Prime Minister.]

The House divided: Ayes, 287; Noes, 98.

Division No. 69.]
AYES.
[3.35 p.m.


Acland, R. T. D. (Barnstaple)
Calne, G. R. Hall-
Drewe, C.


Adams, S. V. T. (Leeds, W.)
Cartland, J. R. H.
Duckworth, Arthur (Shrewsbury)


Agnew, Lieut.-Comdr. P. G.
Cary, R. A.
Dugdale, Captain T. L.


Albery, Sir Irving
Castlereagh, Viscount
Duggan, H. J.


Allen, Col. J. Sandeman (B'knhead)
Cayzer, Sir C. W. (City of Chester)
Duncan, J. A. L.


Anderson, Sir A. Garrett (C. of Ldn.)
Cazalet, Thelma (Islington, E.)
Dunglass, Lord


Anderson, Rt. Hn. Sir J. (Sc'h Univ's)
Cazalet, Capt. V. A. (Chippenham)
Eastwood, J. F.


Anstruther-Gray, W. d.
Chamberlain, Rt. Hn. N. (Edgb't'n)
Eckersley, P. T.


Apsley, Lord
Channon, H.
Eden, Rt. Hon. A.


Aske, Sir R. W.
Churchill, Rt. Hon. Winston S.
Edmondson, Major Sir J.


Astor, Major Hon. J. J. (Dover)
Clarry, Sir Reginald
Elliot, Rt. Hon. W. E.


Astor, Viscountess (Plymouth, Sutton)
Clydesdale, Marquess of
Elliston, Capt. G. S.


Astor, Hon. W. W.(Fulham, E.)
Cobb, Captain E. C. (Preston)
Emmott, C. E. G. C.


Balniel, Lord
Colman, N. C. D.
Emrys-Evans, P. V.


Barrie, Sir C. C.
Colville, Rt. Hon. John
Entwistle, Sir C. F.


Beamish, Rear-Admiral T. P. H.
Conant, Captain R. J. E.
Errington, E.


Beaumont, Hon. R.E. B. (Portsm'h)
Cook, Sir T. R. A. M. (Norfolk, N.)
Erskine-Hill, A. G.


Beechman, N. A.
Cooke, J. D. (Hammersmith, S.)
Evans, Capt. A. (Cardiff, S.)


Belt, Sir A. L.
Cooper, Rt. Hn. A. Duff (W'st'r S. G'gs)
Evans, D. O. (Cardigan)


Bennett. Sir E. N.
Cooper, Rt. Hn. T. M. (E'nburgh, W.)
Evans, E. (Univ. of Wales)


Blair, Sir R.
Cox, H. B. Trevor
Find lay, Sir E.


Boothby, R. J. G.
Critchley, A.
Fleming, E. L.


Bossom, A. C.
Croft, Brig.-Gen. Sir H. Page
Foot, D. M.


Boulton, W. W.
Cross, R. H.
Fox, Sir G. W. G.


Bracken, B.
Crossley, A. C.
Fremtantle, Sir F. E.


Braithwaite, Major A. N. (Buckrose)
Crowder, J. F. E.
Fyfe, D. P. M.


Braithwaite, J. G. (Holderness)
Cruddas, Col. B.
George, Major G. Lloyd (Pembroke)


Brass, Sir W.
Davidson, Viscountess
George, Megan Lloyd (Anglesey)


Briscoe, Capt. R. G.
Davies, Major Sir G. F. (Yeovil)
Gilmour, Lt.-Col. Rt. Hon. Sir J.


Brocklebank, Sir Edmund
Davison, Sir W. H.
Gledhill, G.


Brooke, H. (Lewisham, W.)
De Chair, S. S.
Gluckstein, L. H.


Brown, Rt. Hon. E. (Leith)
De la Bère, R.
Glyn, Major Sir R. G. C.


Bull, B. B.
Denman, Hon. R. D.
Grant-Ferris, R.


Bullock, Capt. M.
Danville, Alfred
Granville, E. L.


Burgin, Rt. Hon. E. L.
Despencer-Robertson, Major J. A. F.
Grattan-Doyle, Sir N.


Burton, Col. H. W.
Dixon, Capt. Rt. Hon. H.
Griffith, F. Kingsley (M'ddl'sbro, W.)


Butcher, H. W.
Donner, P. W.
Grigg, Sir E. W. M.


Butler, Rt. Hon. R. A.
Dorman-Smith, Cot. Rt. Hon. Sir R. H.
Grimston, R. V.




Guest, Lieut.-Colonel H. (Drake)
Manningham-Buller, Sir M.
Sandys, E. D.


Guinness, T. L. E B.
Margesson, Capt. Rt. Hon. H. D. R.
Schuster, Sir G. E.


Gunston, Capt. Sir D. W.
Marsden, Commander A.
Scott, Lord William


Hacking, Rt. Hon. Sir D. H.
Mason, Lt.-Col. Hon. G. K. M.
Seely, Sir H. M


Hambro, A. V.
Maxwell, Hon. S. A.
Selley, H. R.


Hammersley, S. S.
Mayhew, Lt.-Col. J.
Shakespeare, G. H.


Hannon, Sir P. J. H.
Medlicott, F.
Shaw, Major P. S. (Wavertree)


Harbord, A.
Meller, Sir R. J. (Mitcham)
Shaw, Captain W. T. (Forfar)


Harris, Sir P. A.
Mellor, Sir J. S. P. (Tamworth)
Simmonds, O. E.


Harvey, Sir G.
Mills, Sir F. (Leyton, E.)
Simon, Rt. Hon. Sir J. A.


Harvey, T. E. (Eng. Univ's.)
Mitchell, H. (Brentford and Chiswick)
Sinclair, Rt. Hon. Sir A. (C'thn's)


Haslam, Sir J. (Bolton)
Mitchell, Sir W. Lane (Streatham)
Snadden, W. McN.


Heilgers, Captain F. F A.
Mitcheson, Sir G. G.
Somervell, Rt. Hon. Sir Donald


Hely-Hutchinson, M. R.
Moore, Lieut.-Col. Sir T. C. R.
Somerville, A. A. (Windsor)


Heneage, Lieut.-Colonel A. P.
Moreing, A. C.
Southby, Commander Sir A. R. J.


Hepburn, P. G. T. Buchan-
Morgan, R. H. (Worcester, Stourbridge)
Spears, Brigadier-General E. L.


Higgs, W. F.
Morris, O. T. (Cardiff, E.)
Spans, W. P.


Holmes, J. S.
Morris Jones, Sir Henry
Stanley, Rt. Hon. Oliver (W'm'l'd)


Hope, Captain Hon. A. O. J.
Morrison, G. A. (Scottish Univ's.)
Stewart, J. Henderson (File, E.)


Hopkinson, A.
Morrison, Rt. Hon. W. S. (Cirencester)
Stewart, William J. (Belfast, S.)


Howitt, Dr. A. B.
Muirhead, Lt.-Col. A. J.
Storey, S.


Hudson, Capt. A. U. M. (Hask., N.)
Nall, Sir J.
Stourton, Major Hon. J. J.


Hulbert, N. J.
Nicholson, G. (Farnham)
Strauss, H. G (Norwich)


Hume. Sir G. H.
Nicolson, Hon. H. G.
Strickland, Captain W. F


Hunloke, H. P.
O'Connor, Sir Terence J.
Stuart, Hon. J. (Moray and Nairn)


Hunter, T.
O'Neill, Rt. Hon. Sir Hugh
Sueter, Rear-Admiral Sir M. F.


Hurd, Sir P. A.
Orr-Ewing, I. L.
Sutcliffe, H.


Hutchinson, G. C.
Peake, O.
Tasker, Sir R. I.


James, Wing-Commander A. W. H.
Petherick, M.
Tate, Mavis C.


Joel, D. J. B.
Pickthorn, K. W. M.
Taylor, Vice-Adm. E. A. (Padd., S.)


Jones, L. (Swansea W.)
Pilkington, R.
Thomas, J. P. L.


Keeling, E. H.
Plugge, Capt. L. F.
Thorneycroft, G. E. P.


Kerr, Colonel C. I. (Montrose)
Ponsonby, Col. C. E.
Titchfield, Marquess of


Kerr, H. W. (Oldham)
Pownall, Lt.-Col. Sir Assheton
Touche, G. C.


Kerr, J. Grcham (Scottish Univs.)
Raikes, H. V. A. M.
Tree, A. R. L. F.


Keyes, Admiral of the Fleet Sir R.
Ramsay, Captain A. H. M.
Tryon, Major Rt. Hon. G. C.


Knox, Major-General Sir A. W. F.
Ramsbotham, H.
Tufnell, Lieut.-Commander R. L.


Lamb, Sir J. Q.
Rankin, Sir R.
Turton, R. H.


Lambert, Rt. Hon. G.
Rathbone, Eleanor (English Univ's.)
Walker-Smith, Sir J.


Lancaster, Captain C. G.
Rathbone, J. R. (Bodmin)
Wallace, Capt. Rt. Hon. Euan


Latham, Sir P.
Rawson, Sir Cooper
Ward, Lieut.-Col. Sir A. L. (Hull)


Leighton, Major B. E. P.
Rayner, Major R. H.
Ward, Irene M. B. (Wallsend)


Lannox-Boyd, A. T. L.
Reed, A. C. (Exeter)
Warrander, Sir V.


Levy, T.
Reed, Sir H. S. (Aylesbury)
Watt, Lt.-Col. G. S. Harvie


Lewis, O.
Raid, W. Allan (Darby)
Wedderburn, H. J. S.


Lindsay, K. M.
Rickards, G. W. (Skipton)
Wells, Sir Sydney


Lipson, D. L.
Roberts, W. (Cumberland, N.)
Whiteley, Major J. P. (Buckingham)


Llawellin, Colonel J. J.
Robinson, J. R. (Blackpool)
Wickham, Lt.-Col. E. T. R.


Lloyd, G. W.
Rosbotham, Sir T.
Williams, G. (Torquay)


Looker-Lampion, Comdr. O. S.
Ross, Major Sir R. D. (Londonderry)
Willoughby de Eresby, Lord


Loftus, P. C.
Rothschild, J. A. de
Wilson, Lt.-Col. Sir A. T. (Hitchin)


Mabane, W. (Huddersfield)
Royds, Admiral Sir P. M. R.
Womersley, Sir W. J.


MacAndrew, Colonel Sir C. G.
Russell, Sir Alexander
Wood, Hon. C. I. C.


Macdonald, Capt. P. (Isle of Wight)
Russell, S. H. M. (Darwin)
Wright, Wing-Commander J. A. C.


McKie, J. H.
Salmon, Sir I.
York, C.


Macmillan, H. (Stockton-on-Tees)
Salt, E. W.



Macnamara, Lieut.-Colonel J. R. J.
Samuel, M. R. A.
TELLERS FOR THE AYES.—


Macquisten, F. A.
Sandeman, Sir N. S.
Captain Waterhouse and Mr. Munro.


Makins, Brigadier-General Sir Ernest
Sanderson, Sir F. B.





NOES.


Adams, D. (Consett)
Cripps, Hon. Sir Stafford
Hills, A. (Pontefract)


Adams, D. M. (Poplar, S.)
Davies, R. J. (Westhoughton)
Jagger, J.


Adamson, Jennie L. (Dartford)
Day, H.
Jenkins, A. (Pontypool)


Adamson, W. M.
Dobbie, W.
Kirby, B. V.


Alexander, Rt. Hon. A. V. (H'lsbr.)
Ede J. C.
Lansbury, Rt. Hon. G.


Ammon, C. G.
Edwards, A. (Middlesbrough E.)
Lathan, G.


Anderson, F. (Whitehaven)
Edwards, Sir C. (Bedwellty)
Lawson, J. J.


Attlee, Rt. Hon. C. R.
Fletcher, Lt.-Comdr. R. T. H.
Leach, W.


Banfield, J. W.
Gallacher, W.
Logan, D. G.


Barnes, A. J.
Gardner. B. W.
McEntee, V. La T.


Batey, J.
Garro Jones, G. M.
McGhee, H. G.


Beaumont, H. (Bailey)
Green, W. H. (Deptford)
McGovern, J.


Bellenger. F. J.
Greenwood, Rt. Hon. A.
MacMillan, M. (Western Isles)


Benn, Rt. Hon. W. W.
Grenfell, D. R.
MacNeill Weir, L.


Benson, G.
Griffiths, G. A. (Hemsworth)
Maxton, J.


Bevan, A.
Griffiths, J. (Llanelly)
Messer, F.


Brown, C. (Mansfield)
Groves, T. E.
Montague, F.


Burke. W. A.
Guest, Dr. L. H. (Islington, N.)
Morgan, J. (York, W.R., Doneaster)


Cluse, W. S.
Hall, J. H. (Whitechapel)
Morrison, R. C. (Tottenham, N.)


Clynes, Rt. Hon. J. R.
Hardie, Agnes
Nathan, Colonel H. L.


Cocks, F. S.
Henderson, A. (Kingswinford)
Naylor, T. E.


Collindridge, F.
Henderson, T. (Tradeston)
Noel-Baker, P. J.


Cove, W. G.
Hicks, E. G.
Paling, W.




Parker, J.
Stephen, C.
Wedgwood, Rt. Hon. J. C.


Pearson, A.
Strauss, G. R. (Lambeth, N)
Whiteley, W. (Blayden)


Pethick-Lawrence, Rt. Hon. F. W.
Summerskill, Dr. Edith
Wilkinson, Ellen


Robinson, W. A. (St. Helens)
Taylor, R, J. (Morpeth)
Williams, T. (Don Valley)


Sanders, W. S.
Thorne, W.
Wilson, C. H. (Attercliffe)


Sexton, T. M.
Thurtle, E.
Windsor, W. (Hull, C.)


Silverman, S. S.
Tinker, J. J.
Woods, G. S. (Finsbury)


Smith, E. (Stoke)
Viant, S. P.



Smith, Rt. Hon. H. B. Lees- (K'ly)
Walkden, A.G
TELLERS FOR THE NOES.—


Smith, T. (Normanton)
Walker, J.
Mr. Mathers and Mr. Charleton.


Sorensen, R. W.
Watkins, F. C.



Bill read a Second time.

ROAD ACCIDENTS INVOLVING PERSONAL INJURY.

Return ordered, "showing the number of accidents resulting in death or personal injury in which vehicles and horses were concerned and known by the police to have occurred in streets, roads, or public places, together with the number of persons killed or injured by such accidents, in Great Britain during the year ended the 31st day of December, 1938 (in continuation of Parliamentary Paper, No. 102, of Session 1937 –38)." — [Captain Austin Hudson.]

Statement showing the number of convictions at court of summary Jurisdiction in the country Lancaster during the year 1936,1937 and 1938 for (1)driving recklessly or at a speed or in a manner dangerous, and (2) driving or being in charge of a motor vehicle when under the influence of drink or a drug


Police District.

1936.
1937.
1938.



(1)
(2)
(1)
(2)
(1)
(2)


Lancaster County
…
122
87
125
I07
118
108


Boroughs—


Accrington
…
—
1
5
5
1
1


Ashton-under-Lyne
…
—
1
2
5
2
1


Bacup
…
—
—
2
—
—
1


Barrow-in-Furness
…
3
1
3
3
3
2


Blackburn
…
3
5
5
10
4
3


Blackpool
…
10
9
7
13
13
14


Bolton
…
6
12
4
8
9
15


Bootle
…
—
—
2
1
—
3


Burnley
…
7
9
8
11
10
5


Clitheroe.
…
—
2
2
1
1
—


Lancaster
…
3
1
—
1
—
1


Liverpool
…
67
26
54
26
156
28


Manchester
…
51
91
49
77
35
67


Oldham
…
4
9
1
7
—
5


Preston
…
9
2
6
16
4
5


Rochdale
…
6
7
6
10
—
2


St. Helens
…
3
—
2
3
1
1


Salford.
…
2
16
9
20
13
15


Southport
…
3
1
6
1
8
2


Warrington
…
3
4
2
3
1
2


Wigan
…
2
6
1
6
8
8


Total Boroughs
…
182
203
176
227
269
181


Grand Total
…
304
290
301
334
387
289

Orders of the Day — SUPPLY.

3RD ALLOTTED DAY.

REPORT [16th March].

Resolutions reported:

NAVY ESTIMATES, 1939.

VOTE A. NUMBERS.

1. "That 133,000 Officers, Seamen, Boys and Royal Marines be employed for the Sea Service, together with 976 for the Royal Marine Police, borne on the books of His Majesty's Ships, and at the Royal Marine Divisions, for the year ending on the 31st day of March, 1940."

VOTE I. WAGES, ETC., OF OFFICERS AND MEN OF THE ROYAL NAVY AND ROYAL MARINES, AND CIVILIANS EMPLOYED ON FLEET SERVICES.

2. "That a sum, not exceeding £17,540,000, be granted to His Majesty, to defray the Expense of Wages, etc., of Officers and Men of the Royal Navy and Royal Marines, and Civilians employed on Fleet Services, which will come in course, of payment during the year ending on the 31st day of March, 1940."

VOTE 10. WORKS, BUILDINGS AND REPAIRS AT HOME AND ABROAD.

3. "That a sum, not exceeding £2,265,000, be granted to His Majesty, to defray the Expense of Works, Buildings and Repairs at Home and Abroad, including the cost of Superintendence, Purchase of Sites, Grants and other Charges connected therewith, which will come in course of payment during the year ending on the 31st day of March, 1940."

VOTE 2. VICTUALLING AND CLOTHING FOR THE NAVY.

4. "That a sum, not exceeding £5,323,000, be granted to His Majesty, to defray the Expense of Victualling and Clothing for the Navy, including the cost of Victualling Establishments at Home and Abroad, which will come in course of payment during the year ending on the 31st day of March, 1940."

VOTE 3. MEDICAL ESTABLISHMENTS AND SERVICES.

5."That a sum, not exceeding £597,500, be granted to His Majesty, to defray the Expense of Medical Services, including the cost of Medical Establishments at Home and Abroad, which will come in course of payment during the year ending on the 31st day of March, 1940."

VOTE II. MISCELLANEOUS EFFECTIVE SERVICES.

6."That a sum, not exceeding £3,516,800, be granted to His Majesty, to defray the Expense of various Miscellaneous Effective Services, which will come in course of payment during the year ending on the 31st day of March, 1940."

VOTE 13. NON-EFFECTIVE SERVICES (NAVAL AND MARINE)—OFFICERS.

7. "That a sum, not exceeding £3,008,000, be granted to His Majesty, to defray the Expense of Non-Effective Services (Naval and Marine) —Officers, which will come in course of payment during the year ending on the 31st day of March, 1940."

VOTE 14. NON-EFFECTIVE SERVICES (NAVAL AND MARINE) —MEN.

8. "That a sum, not exceeding £5,662,400, be granted to His Majesty, to defray the Expense of Non-Effective Services (Navaland Marine)—Men, which will come in course of payment during the year ending on the 31st day of March, 1940."

VOTE 15. CIVIL SUPERANNUATION, ALLOWANCES AND GRATUITIES.

9. "That a sum, not exceeding £1,379,600, be granted to His Majesty, to defray the Expense of Civil Superannuation, and other Non-Effective Annual Allowances, Additional Allowances and Gratuities, which will come in course of payment during the year ending on the 31st day of March, 1940."

NAVY SUPPLEMENTARY ESTIMATES, 1938.

VOTE A. ADDITIONAL NUMBER FOR THE NAVY.

10. "That an additional number, not exceeding 27,500 Officers, Seamen, Boys and Royal Marines, be employed for the Sea Service, borne on the books of His Majesty's Ships, at the Royal Marine Divisions and at Royal Air Force Establishments for the year ending on the 31st day of March, 1939."

NAVY SUPPLEMENTARY ESTIMATE, 1938.

"That a Supplementary sum, not exceeding £100, be granted to His Majesty, to defray the charge which will come in course of payment during the year ending on the 31st day of March, 1939, for expenditure beyond the sum already provided in the grants for Navy Services for the year."

Schedule.


—
Sums not exceeding


Supply Grants.
Appropriations in Aid.


Vote
£
£


1. Wages, etc., of officers and men of the Royal Navy and Royal Marines, etc.
465,000
—


2. Victualling and clothing for the Navy.
390,000
—


3. Medical establishments and services.
63,100
—


4. Fleet air arm
Cr. 517,000
—

—
Sums not Exceeding


Supply Grants.
Appropriation in Aid.


Vote




8. Shipbuilding, repairs, maintenance, etc—




Section II—Materiel.
300,000
—


Section III— Contract Work.
Cr. 400,000
1,350,000


9. Naval armaments.
Cr. 521,000
—


10. Work, buildings and repairs at home and abroad.
20,000
400,000


11. Miscellaneous effective services.
200,000
—


Total, Navy (Supplementary), 1938 £
100
1,750,000

Motion made, and Question proposed, "That this House doth agree with the Committee in the said Resolution."

3.47 p.m.

Mr. A. V. Alexander: Since the Debate in Committee on the Navy Estimates there have been developments in the international situation, and while it would be wrong on this occasion to attempt to discuss the general situation, there are one or two things which need to be said in relation to the position of the Fleet. In the first place, may I say that I, personally, welcome the firm pronouncements of the Government in the last few days. I sincerely welcome the pronouncement of the Chancellor of the Exchequer this afternoon, as being a confirmation of previous pronouncements, but I do beg those responsible for naval policy in this matter to make this clear to His Majesty's Government. While all parts of the House were very satisfied with the report of the Admiralty last week as to the general progress which has been made and, if I may so call it, the "good heart" of the Royal Navy at the present; moment, yet we have a feeling that the task which the Royal Navy has to face might have been less, if there had been firmer pronouncements and if there had been a difference in our approach to other Powers at the right time. Those in all parts of the House

who have been watching developments, not alone in the last few days but over a longer period, will probably agree that it is essential, in the present circumstances, in the event of any opening of belligerency —which all of us wish to see avoided—to see that the Royal Navy is not handicapped in its important mission in a European conflict by the addition to the strength of the enemy of resources which they ought not to have. Therefore, I am anxious that in the present circumstances, Government action should be as rapid, as effective and as widely spread with other Powers as possible, in order that we may not drift into a weaker situation. Beyond that, I will not make any further reference to the situation. It is only on the naval aspect of it that I have spoken, because I am confident that the Royal Navy will be of immense value to this country, not only with regard to the wider sea policing and defence of British interests, but in finally playing its part in home waters in bringing any European enemy to a proper condition.
Having said that, may I refer to one or two of the telegrams, advices, and reports which have appeared in the Press this morning in regard to the situation? I have seen it suggested that, partly in reply to the statement of the Prime Minister at Birmingham on Friday last, Germany is considering giving notice of denunciation of the Anglo-German Naval Treaty of 1935. It would be, of course, for the Government to make whatever comments it might wish to make upon that, if and when the notice of denunciation was received, but I think it would not be out of place for us, on this side of the House, to say that we have never appreciated the Anglo-German Naval Treaty of 1935. We have never understood what was the greatness of its value to this country, and when we consider two specific naval matters in connection with it, I am not at all sure that many people would be very much downhearted by a denunciation of the Treaty.
I refer to two matters specifically. In the first place, I refer to the question which was raised by the right hon. Member for Epping (Mr. Churchill) on Thursday last in relation to the announcement by the Parliamentary Secretary that in order—and this was the important point —to deal properly with the provisions of


the Anglo-German Naval Treaty, there would be a proposal to scrap one or two of the "Royal Sovereign" class of capital ships, commencing in two or three years' time. I refrained from any comment on that, because I could see that if the Anglo-German Naval Treaty remained in existence, it would be prudent and wise for the time being to have such an arrangement for their forward programme, including scrapping arrangements, so that they would be able to meet the situation and development in Germany, not with a number of old ships in relation to new, but with a properly balanced capital ship fleet in relation to those of other Powers. But in view of the suggestions made in the Press this morning that the Treaty may be denounced, I would say that it would surely be for the Government at once, on receipt of such notice of denunciation, entirely to reconsider their proposals for the scrapping of the "Royal Sovereign" class, because it would be advisable to keep every serviceable ship, and especially ships of that size, for duty in the event of an outbreak of belligerency.
In the second place, I refer to the submarine menace. The position cannot be made substantially worse by a denunciation of the Treaty than it would be without any such denunciation, for the Germans have already exercised what they regard as their right under the Treaty to build up to 100 per cent. of British submarine tonnage, and that means, as I said the other day, that you would have probably anything up to 150 submarine ship units which would be available to Germany within a comparatively short time. Of course, I think we are entitled to doubt the proposal of the Germans to build up to that tonnage in the light of our consideration of other promises made by Germany. I have never heard, for example, that the building of additional submarines by Germany was an effective naval answer to the building of submarines by the Union of Soviet Socialist Republics. That seems to be about the only reason put forward by the Germans for their actual decision, but the only point I want to make is that if the Treaty is subsequently cancelled, it makes no real difference.
The telegrams in the "News-Chronicle" this morning indicated that something which the right hon. Member

for Epping also said last week is justified, and that is that they have probably been preparing, by the assembly of parts of submarines in different parts of the country, for a speed-up in the actual building of submarines. If that is so, it means that we also must be prepared to speed up in regard to any answer that we may make, from the naval point of view, to the submarine menace. In that connection may I say that I am not entirely satisfied with the Admiralty's answer last week with regard to our measures from an anti-submarine point of view. We all welcome the interest displayed by the Admiralty in this problem, as evidenced by the inclusion in their building programme of 22 new escort ships of a fast type, particularly able to deal with submarines, but I must say that I should have preferred the Admiralty greatly to enlarge their destroyer programme, and in order to be able to do that without undue stress upon the financial resources of the country, that we should have a sufficient number of destroyer flotillas for anti-submarine work, not necessarily of a large type, but fast and effective, able to work from a commodore ship or a depot ship, with proper cover, and yet be able to do all that is really necessary in hunting submarines, especially of the kind that may be used in any outbreak of the kind that we have feared.
I beg the Admiralty, in the light of what I have said, to reconsider their destroyer programme. I would not mind at all, from my point of view, if you kept the new escort ships and used them as escorts, but I think you want more fast and small destroyers for anti-submarine work. I have never complained about the Admiralty building the larger type of destroyers in previous programmes for work with the Fleet, and those ships will certainly, in their class and of their size, be required as an answer to the type of destroyer which has been built by Italy and Japan, but I beg the Admiralty, in the light of developments, to make proper and rapid provision for destroyers from the anti-submarine point of view.
Further, I am not satisfied with the answer of the Admiralty with regard to the necessity for changing partly our strategy and dock arrangements for light flotillas to deal with the submarine. We had the usual long answer last week about Pembroke and the possibility of using


other mercantile docking facilities on the West Coast, but I am not satisfied with that. The Civil Lord will forgive me if I say that while I have never been in the past an ardent advocate of the Pembroke position, in the light of the circumstances as they exist, facing the situation that we face to-day, surely all of us who are interested in naval matters must admit that, quite apart from the increased submarine menace to our Western approaches, we should have very great difficulty, in the light of the modern warfare method that we expect to be adopted, in keeping ships of any number or size under repair at our East Coast dockyards. I think that really is a very important point, remembering the kind of answer that was made to my hon. and gallant Friend the Member for Pembroke (Major Lloyd George) last week.
I believe that you will have to find other accommodation in dockyards, during any intensified outbreak of attack from the Continent, for ships that you would ordinarily send to Sheerness and Chatham. We may as well say what we mean. You have not much space at Pembroke, but you have a dock which ought to be cleared to be ready for the reception of ships, and it ought to be fitted with the necessary machinery to deal with ships there. I know it was said by the Civil Lord last week that you could use some of the civil docks, but will he forgive me for saying that you will require the civil docks on the West Coast for many ordinary mercantile ships that would in the ordinary way dock on the East Coast? That is, you will have to divert many of the food and raw material ships in the ordinary way from East Coast to West Coast ports during war, and you will have to be able, especially if there is any strain on the numbers of the Mercantile Marine, to get them into dock and fitted and refitted at the earliest possible moment, and away again. I think the Admiralty should give due and further attention to what has been said from more than one part of the House with regard to the development of some place for light flotillas on the West Coast.
The only other point I need mention about the situation as I have been thinking of it in the last 48 hours is a point which I do not think any of us mentioned last week. That is as to whether the

Admiralty are satisfied with the antiaircraft defences now actually fixed in the docks. I suppose that, strictly speaking, the anti-aircraft gunnery defences of the naval dockyards are a matter for the War Office, but it is very important, from the point of view of the maintenance of the Admiralty's work in the dockyards, to know whether they regard the antiaircraft defences at these dockyards as adequate in the light of the new situation and new menace. I hope very much that we shall have some statement on that subject, and if the Admiralty are not completely satisfied, I beg them to consult with the War Office and see that these anti-aircraft defences are speeded up until the Admiralty are perfectly satisfied.
I do not want to go again over the ground that I covered last week, when I said a few words about the naval strategic position, especially in relation to the Far East, but, looking back over my notes and through the report of the general Debate last week, I see that owing to lack of time I made no reference to the position of the Dominions in regard to naval matters. I think it would be ungrateful of the House if someone did not raise specifically the question of the naval action taken by His Majesty's Dominions. Take the case of Australia. I do feel that in the last two or three years the Australians have made very big efforts indeed, in relation to their population, to assist in the naval defence of that part of the Commonwealth, and I think one ought to acknowledge that publicly in the House. I think, too, that the increased expenditure which has been undertaken by the Dominion of New Zealand is important to note. But I should like to say this to the Admiralty: It seems to me, considering the Far Eastern position and the sort of changes that may arise, that it would be a wise precaution if, while recognising all that the Government of Australia has done in the past, it could be so arranged that there are docking facilities for the largest types of naval vessels in Australia.
It might also be worth while to approach the Government of South Africa for a possible use of docks, say, at Durban and Cape Town for the same purpose, in the event of emergencies. I am not at all sure, from such inquiries as I have made, whether the large docks at Durban can now take a capital ship; but I am thinking of the possibilities in the


event of an outbreak of belligerency in which Far Eastern Powers may be involved, and in those circumstances it may be necessary to keep a part of our Fleet in very wide formation, and we may want to dock ships at some place other than Singapore. I do not know whether, south of the Equator there is at present a dockyard which in its present condition could take a British capital ship. That is really why I am putting the point to the Admiralty to-day, and I trust that the Parliamentary Secretary will bring it to the notice of the First Lord and have it considered. It may mean, perhaps, a little more strain on the Government of Australia, but I believe that after the wonderful spirit they have shown in the last two or three years, to which we pay tribute, they would be willing to assist in whatever way is possible in that direction. I think also of the great Dominion of Canada. It is true that in the last three or four years we have had the advantage of seeing Canada take over three or four large-type destroyers, but I should feel easier about the general Commonwealth contribution to the naval defence of the Commonwealth if Canada could see its way to be a little nearer, in its naval contributions, to what Australia has done.
Now I turn to a subject which my hon. Friend the Member for Aberdare (Mr. G. Hall) would have raised. I am very sorry that because of illness he cannot be present to-day. I raise the subject during this Debate so that it might perhaps be referred to later when we come to deal with Vote 10. It is on the subject of oil fuel. I cannot hope to address the House with that knowledge of the question that my hon. Friend the Member for Aberdare possesses, but I ask the Admiralty whether they are now taking any active steps, in view of the situation, to have a speed-up in the production of oil for the Navy from coal. Since the last Debate on this matter, in connection with the Navy Estimates, the Admiralty has, I hope, seen this document, a copy of which I hold in my hand. It is a document published by, shall I say, the wicked Labour party, and is the report of a research committee presided over by my hon. Friend the Member for Aberdare. That committee examined very exhaustively the whole question of the pro-

duction of oil from coal and the different processes that may be followed.
I would stress the point that, whilst we do not wish to see the Royal Navy handicapped in any way by a departure from the use of oil, with all its possibilities for reduced manning in the engine-rooms, and the efficiency and speed with which that fuel can be used, yet it seems to me that we ought to have as much as possible of our reserve fuel of that character within our own country, I beg the Admiralty to note that I am not attacking them from the point of saying that they have not been sufficiently prudent in getting reserves of imported oils into the country. From my reading of the Estimates of the last two years I should say that probably the Admiralty have made very good provision within those Estimates for reserves of fuel, and I am satisfied that within, say, a few months, they will be fairly right. But I cannot help remembering what happened during the last War. I remember the enormous price to which imported fuel went finally, as soon as there was a world shortage. I am convinced that both from the point of view of safety in defence and of economy in the national interest, added to which we would be helping employment in the coal industry, this is a matter to which special attention should be given. I shall not attempt a technical examination of the various processes of oil extraction, but in its report the labour research committee deals with a synthetic process sometimes referred to as the Fischer system. It seems to me that with the possibility of the system being worked in small plants at the head of separate pits, it would be of great assistance if some of these processes could be started at once at four or five different points, and especially in South Wales, for setting up a new reserve of fuel and having it in safe places.
I will say a few words about one subject to which the Civil Lord did not give a reply last week. His speech was full of detail and he was courteous as always in his replies during the Committee stage, but I was exceedingly disappointed that he did not find time to reply to myself or to my hon. Friend the Member for Romford (Mr. Parker) with regard to the status and conditions of promotion of men from the lower deck.

The Civil Lord of the Admiralty(Colonel Llewellin): I had intended to reply when I got up, but towards the end of my speech I thought I had been rather long and that I was wearying the Committee, and I cut my remarks short. The Parliamentary Secretary will reply to that point later.

Mr. Alexander: I was careful to indicate that I did not think it was through any lack of courtesy that the hon. and gallant Member did not deal with the point, but I want now to impress on him that we think this matter is one of great importance. We think, for example, that the method of promotion from non-commissioned rank is far less adequate in the Navy than in either of the other Services. We now see the Service expanding very rapidly. Within the next two or three years we shall have a total personnel of officers and men of not less than 160,000, and may be more. Therefore we think it is quite inadequate to suggest that the Admiralty can provide only 17 promotions from the lower deck in a year. Last week my hon. Friend the Member for Romford pointed out that in answer to a question which he put on 1st March the Admiralty stated that there were 179 seamen ratings who had been reported upon as being capable of being considered for promotion from the lower deck, in addition to the 43 ratings who were actually undergoing training for that purpose.
We have no hesitation in saying that if the Admiralty want to see a continuance and expansion of that national spirit of service in this greatest of all our Services, they must bring the Navy, I shall not say into line with the other Services, but in advance of the other Services, by providing channels of promotion from the lower deck. I hope, therefore, that in the reply to-day we shall get far more detailed and adequate information. I cannot believe that there is any lack of material on the lower deck for promotion to the commissioned ranks. I hold that with proper training every seaman who enlists in the Navy should have the right to promotion by efficiency and duty and service, until he may become an Admiral promoted from the ranks. That is the basis on which our Service ought to be conducted. There is no lack of material and I hope there is no lack of will on the part of the Admiralty to make that possible.
Finally, I want to say a word or two about the accountancy of the Admiralty, the costing system and the like, in so far as they are effective or ineffective as a check upon profiteering. I did not make any comment last week on the kind of matter raised by my hon. and gallant Friend the Member for Nuneaton (Lieut.-Commander Fletcher), but I was disturbed at the revelations he made upon the report of the Public Accounts Committee in the case of the "Caledonia." I shall leave him to say anything further about that particular incident, but I am anxious that the Navy Department should not find itself in the position of being shot at to the extent to which the Air Ministry has been shot at in the last two or three years for failure to check gross profiteering. How far the Admiralty itself can be held responsible for profiteering in respect of aircraft supplied to the Fleet Air Arm I do not know, because I do not know the arrangements for ordering between the Admiralty and the Air Force. We know that the orders are placed through the Air Ministry for the Fleet Air Arm, and if the charge has to be borne on the Navy Estimates, it is incumbent on the Financial Secretary to see that, with the huge burden that is being heaped up and the huge annual charge which the Admiralty will have to meet in years to come, every possible step is taken to see that the Admiralty are getting value for money when ordering their aircraft.
I cannot say that I am altogether satisfied with the check on profiteering in other directions. Take, for example, the figures of some of the leading firms which are engaged on naval contracts. The profits, to say the least of it, are hardly to be described as small. The iron and steel profits have been going up very remarkably, as have the profits of the companies engaged in naval shipbuilding. I have so many of them here, 15 or 16, that it is hardly worth while for me to go through and quote them all, but it is evident from the figures that in regard both to the iron and steel firms, which make a good deal of the armament equipment for the Navy, and the naval shipbuilding firms, their profits are going up enormously.
There is always a tendency when there is a large and expanding programme of the type which the Navy has now to contemplate, to be a little loose in the checking of expenditure. It is true that we had


testimony in the House which I welcomed very much, that contractors experience a little more difficult time with the people who check matters at the Admiralty than with those in any other Department. I hope that that is still true, but I beg the Admiralty to consider it from this angle: that however efficient their costing system may be, it cannot be a final safeguard, in the interests of the public or of the Admiralty, of value for money. The profits now being made are so enormous that the only way to deal with the matter is to adopt the suggestion that I made some weeks ago. That is to have a stringent audit of the accounts of the firms engaged in the armament industry and to arrange that, after allowing a reasonable return on the capital employed in the business, the profits which inure from Government contracts should automatically go back to the Treasury in relief of the taxpayer. I hope that that point will be looked into.
The Prime Minister and the Government are asking now for an unexampled measure of voluntary service from the nation at large in face of a growing national menace. The people whom they are asking to make that voluntary service are asked to do it without profit, and, I think, rightly if we axe to have a voluntary system. The Government ought not in the light of these circumstances to be countenancing for a moment the enormous profits upon capital which are made in supplying what, after all, are the essential things if the Services are to be equipped adequately to defend themselves and the nation. We believe the Fleet to be in good condition and in good heart. The matters that I have mentioned are all worthy of attention, and if our friendly criticisms are used in a way to help the Fleet, I believe that, if and when it is called upon, it will, as always, give an exceedingly good account of itself.

4.20 p.m.

Sir Ronald Ross: It is always a pleasure to listen to the right hon. Gentleman the Member for Hillsborough (Mr. A: V. Alexander), whether in one of his more virile manifestations on an Import Order, or on any other subject. We enjoy hearing him on the Navy more than on any other subject, because we know that his interest in the Fleet is second to that of no other Member in the House, whether or not we agree with what he says. It

happens that I am in the fortunate position of agreeing with the right hon. Gentleman in nearly all that he has said to-day. I agree, in particular, on the question of destroyers, because I was gravely Concerned last year when the customary flotilla was omitted from the Estimates. This year we have two flotillas, but that provision only brings us back to the average of one per year. I should have thought that at the present time we should have been laying down destroyers in greater numbers than that. In the Press only to-day there was a letter from a distinguished admiral saying that from his great experience he had always found that the shortage of destroyers was perhaps one of the most serious points in the last naval War. It may be that in fast escort vessels, about which we have heard, the point which the right hon. Gentleman has raised as to having destroyers of two categories, fleet destroyers and fast escort destroyers, is being met; and that when we see what the escort vessel really is, it may be in a sense a smaller type of destroyer capable of fulfilling the functions of a destroyer on escort duty.
I am in the fortunate position of finding myself in agreement also with the spokesman for the Liberal party. I allude to the well-informed speech which the hon. and gallant Member for Pembroke (Major Lloyd George) made on the Estimates in which he referred to the necessity of western bases. It would be natural for him to support the claims of that area which he so admirably represents, but he did not do it on those grounds. He did it on other grounds which we must all admit. There has been, since the last Estimates, a vital change in our position in the Western seas and in the possibilities of protecting the Western approaches. I allude to the loss of the two Irish bases, Queenstown and Bantry, which were handed back to the Government of Mr. De Valera. I said at the time, and I repeat now, that I do not think that the Government of Eire are likely to allow the Admiralty the use of those bases in time of war except on impossible terms which we could not accept. Therefore it is essential that the Admiralty should make provision for bases of equal capacity to those which are no longer under Admiralty control. I do not think the case of Lough Swilly is so important, because the Scottish bases,


the harbours of Northern Ireland, and the docking accommodation of Belfast, which I do not think the Civil Lord mentioned last time, would be available, but the question of bases for protecting the Western approaches is urgent. It is known to all of us that the establishments of Pembroke Dock are not of the highest degree of efficiency, but I suggest that it would be possible to make one immediate reinforcement to these resources by putting a floating dock there. Anyone who goes to Southampton has seen a large floating dock there. I do not know to whom it belongs, but since the opening of the Southern Railway's graving dock I do not think it has been used. Would it not be possible to follow the precedent which the Admiralty made when they towed a floating dock to Singapore, and to move this one to the Western coast, and so provide docking accommodation for ships up to a considerable size there?
The question of the value of the "Royal Sovereigns" has also been raised in the Debate on the Estimates. I hope that unless we are pledged to a limitation as to quantity, the policy of the Admiralty will be new building and not new big reconstruction, because the big reconstruction of ships which the Admiralty have been obliged to adopt during the period when they were limited as to numbers of capital ships and the building of new ships is very expensive. It comes to £3,000,000 a ship, and the modern implements of war have to be fitted to a hull built many years before instead of having a hull built to suit modern ideas. The hull of a warship is about the last part of the vessel to become worn out, and that eventually is, of course, worn out too. I agree that, despite the high cost of maintenance of capital ships, the "Royal Sovereigns" could no doubt fulfil useful functions, but as regards the functions which my right hon. Friend the Member for Epping (Mr. Churchill) suggested as a check on 8-inch cruisers in connection with the protection of trade, the only precedent which I can think of for using an old battleship for that purpose was when His Majesty's Ship "Canopus" was sent to South America to keep in check the 8-inch German cruisers "Scharnhorst"and "Gneisenau," and that was not a very fortunate precedent.
This brings me to the Naval Treaty with Germany, and here I emphatically

part company with the right hon. Gentleman the Member for Hillsborough, because he has said he never understood its value. I will try in a few phrases to enable him to do what he has said he has never been able to do. He complained that we made a great mistake in tying ourselves down in the Anglo-German Treaty. The great point of that Treaty, however, is that it did not tie us. The only contingent action which we may be obliged to take is in two years' time to scrap a ship already half a century old. Can the right hon. Gentleman say anything which we could have wished to do as regards naval shipbuilding which we cannot do because. of that Treaty? I can think of nothing. It is a unique Treaty in many ways. It is the only instance of the German Government voluntarily entering into a treaty for the limitation of their armaments. It is the only instance of a Naval Treaty which did not demand of this country the immediate sacrifice of tonnage, and I think it is a Treaty which was fair to both sides. Of course, if the German Government care to denounce it, that is their affair. I think the loss will be as much theirs as ours, but I suggest that the advantages of knowing where you are in naval affairs is of great importance, because there is always a lag of three or four years between the time when the decision is taken to build a ship and when that ship becomes an effective part of the fleet. Therefore, you have so many years' warning as to what the situation may be.

Mr. Alan Herbert: Is it possible for us to say that we know where we are with regard to any German agreement at the present time?

Sir R. Ross: I will not tell my hon. Friend that we know where we are with regard to every German agreement, but we must give even Mr. Hitler his due, and as regards this one I would appeal to my hon. Friend who represents the Admiralty to say whether that agreement has been kept in spirit and in practice up to now, because I know of no breach, or supposed breach, of that agreement up to the present time, and it has run ever since 1935 to the present day. However, that is a point which can be more adequately dealt with by those who represent the Admiralty upon this occasion. I think the chief objection to the Anglo-German Naval Agreement rests very largely upon


false assumptions, because my right hon. Friend the Member for St. George's (Mr. Duff Cooper) who, I regret to see, is not for the moment in his place, when speaking upon it last week, said:
I would remind my hon. Friend, what a great many people have forgotten, that since 1914 a war has been fought, in which Germany was defeated, and that at the end of that War she had no navy at all. Our allowing her to have a navy, contrary to the provisions of the Treaty of Versailles, was an act of generosity on our part of which she has gradually taken advantage." — [OFFICIAL REPORT, 16th March, 1939; col. 699, Vol. 345.]
It seems to me that in making that statement my right hon. Friend had for once rather lost sight of the position. He suggested there that this treaty is not one to limit the German Fleet, but that without it Germany would have had no fleet at all. There has been no treaty limiting their air force, and what has happened to that air force? There has been no treaty limiting their army, and how much greater is their army? I think that it is possible—I do not say it is certain, far from it, but I think it is possible—that had the other countries met the Germans in 1935 in the same spirit in which my right hon. Friend Lord Monsell, then First Lord of the Admiralty, met them in the naval sphere, we might not be faced with the appalling European situation in which we find ourselves to-day.
One matter of particular importance and of great moment to which the right hon. Member for Hillsborough alluded is the question of submarines. As far back as 1935 the Germans had put in a saving clause that they might ask for equality with this country as regards submarines. At first that might appear to suggest that they wanted a quite abnormal number of submarines, but, as we all know, we are weaker relatively to other Powers in submarines than in any other class of ship, and if the Germans had equality with us in submarines they would still be infinitely inferior to France. We have 44 under-age submarines and France has 76. Of course it is true that Germany has a very large number of very small submarines, but I should have supposed that it would have been more dangerous if they had started building submarines which did not appear to be so much designed for service in the Baltic as for service on the high seas, if they had built big submarines with a wide

radius of action, because the comparatively few larger boats which they have are not much larger than our Swordfish type.

Mr. Alexander: Has the hon. and gallant Member considered what I said last week, that the changed situation in Spain makes it a very reasonable thing, from the German point of view, to build small submarines which can be based close to our ocean routes?

Sir R. Ross: I quite see the danger which the right hon. Gentleman has in mind, but I think he is wrong in attributing the motive for building small submarines to the war in Spain. The policy of building small submarines was initiated in 1935, before the war in Spain had broken out. A large number of the small submarines were under construction before the war had started in Spain. One point which I do not think has been mentioned by any one in connection with the German Naval Treaty, is its relation to general naval treaties. In 1935 this country was contemplating a general naval treaty which eventually became operative in the Naval Treaty of 1936, and the whole basis of that treaty was that it should be on a qualitative basis. Through no fault of ours it was not possible to get it on to a quantitative basis, because some countries, I think Japan in particular, refused to be limited, but there was the valuable point that ships were put into certain defined classes. That is very greatly to our interest, because if that is not done there may be a new type of ship which may render all those of an old type obsolescent.
I can give the House what I think is an instance of the alarm, although I think it was an exaggerated alarm, in such a case. It was the building of what were called the "pocket battleships," the "Deutschland" and her two sisters, before Germany was a party to any naval treaty. Those ships cut right across the qualitative system of naval disarmament, and appeared to create the rather difficult position that there would be no ship that could deal with them. As a matter of fact, I think it will be found that those pocket battleships were not by any means as good an investment as was supposed at the time, because I do not think they are fit to lie in the line through protection having been scrapped to a great extent in favour of speed and gun power. As a


long-term policy I do not feel they will be a very good investment. That is the difficulty we are faced with if there is no qualitative limitation.
In connection with attack from the air, the Financial Secretary gave us much interesting information in presenting the Estimates, but there is the very significant fact that despite the presence of large and powerful air forces on both sides in Spain there is no instance, I think, of any warship of any considerable size being put out of action from the air, a thing which I must say astonishes me, I thought it would have happened, and I thought it had happened. I thought that the old battleship "Jaime Primero," which was on the Government side, had been put out of action, but recently it sailed out of harbour and was able to get to some French port, so it was apparently in a position to go to sea.

Mr. Gallacher: Was there not one of Franco's?

Sir R. Ross: I never can understand what the hon. Member says, so I am afraid I cannot answer his question, otherwise I should be very glad to do so. We must not lose sight of this point, that although war in the air is very much in everyone's mind at present and it is a great danger which may vitally affect large numbers of people in this country, yet loss of the command of the sea would affect everyone, without a single exception. I think that this country, or any country, would probably stand up to air attack much more resolutely and with less initial shock and less damage than is often popularly supposed, but if we once lost command of the sea I do not know what would happen. Therefore, it is indeed heartening to have the good account we have heard of the Navy, and to see a building programme which, except perhaps in the one respect of destroyers, is, I think, adequate to the situation.

4.41 p.m.

Major Lloyd George: I have one or two observations to make upon points which were raised last week and to-day. The first subject is the shortage of light craft for escorting and convoy purposes. I should have liked to have had some assurance from the Civil Lord's reply that some of the leeway was going to be made up at a more rapid rate. If I recollect aright,

the Parliamentary Secretary, in introducing the Estimates last year, said the reason why there was no provision for destroyers then was that about 40 were on the stocks. I can only say in answer to that—it has been said often before, but it is obvious that it needs to be said again—that compared with our position at the beginning of the last war we are nothing like as well off as we were in the matter of light craft for escorting purposes, and that the submarine situation, whatever may be the effect of anti-submarine devices, is very much more serious than in 1914. I believe Italy has boasted that she will shortly have, if she has not already got, one of the largest submarine fleets in the world. In addition to the shortage of destroyers and escorting craft, our cruiser strength is far below what it was in 1914. If I read the Estimates aright, of four cruisers in the Estimates last year one has been ordered but is not laid down and three have not been ordered at all.
Our position as regards our Mercantile Marine is very much more serious now than in 1914. We have far more people in this country to provide for, and are in a very different strategic position from what we were in at the beginning of the last war, and we have a shrinkage in our Mercantile Marine. Whether we like it or whether we do not we have to face the fact that there are likely to be far more bases for operations against our Mercantile Marine than there were in the last war. The bases to be found on the Spanish coast to-day would be ideally suitable for boats of a short range; and it is no use saying that we could use the Cape route, because on that route there are many potential bases which would make it possible to cut right across any one of those routes.
The Civil Lord said that we must not assume that Spain was going to be hostile to us. It is also true to say that it is equally foolish to assume that Spain was going to be friendly. When we are preparing for the defence of this country we have to be ready for every possibility. British merchant ships have been sunk within the last 12 months by this possibly friendly Power. I ask the Government to consider the eventuality of this coast being used against our Fleet and against our Mercantile Marine by this Power, which is one of the axis Powers to-day. Taking the analogy of the last War, I


would point out that we did not in the pre-war period say that Germany was the enemy; we simply prepared against the Power that was building ships which could attack this country in certain eventualities. We prepared against all possibilities. It would be foolish to assume to-day that all that coast of Spain and the coast of North-West Africa will be perfectly free for our ships to come and go without let or hindrance.
As a matter of fact, it is agreed on every hand in this House that we have not these escort craft at the present time. I do not know whether hon. Gentlemen have seen the letter in the "Times "this morning from an Admiral who had, so he says, at one time command of 120 destroyers in the last War. He says:
There were never enough and that too when we were never far from our own base. Double the distance from the base and you double what is technically known as the' turn round,' that is, time required for a flotilla to return to base, re-fuel, give the minimum of rest to her commanding officers, and return to the point of contact.
In other words, if your base is far from the scene of operations you obviously need more escorting craft. The position is made very much more serious by the addition to our troubles in the last War of the air menace, which has added considerably to our problems. In addition to being fitted with every known antisubmarine device, ships have now to be very heavily armed against air attack. This fact will preclude the use of ships which were very successfully used in the last War. If you are to meet the menace of the air and the submarine you have to have very heavily-armed vessels and that means a specially designed vessel. I would repeat that the Parliamentary Secretary said last week, that we are safe only as long as we can keep our trade routes open. That applies particularly to-day, when oil is our main fuel. I would ask the Government to consider these points, which are a very urgent necessity to the safety of the country.
The Minister also told us that we should have to face the possibility of defeat by direct action. Possibly you might put that out of account at the moment, as we did in the last War. When defeat by direct action was more remote than it ever had been, that year and the subsequent year were those in which this

country was nearly defeated. When we were entirely free from direct action we were nearly brought to defeat by action which could be controlled only by swarms of the small vessels.
On the subject of bases on the West Coast, the Civil Lord of the Admiralty told us that ample provision was being made, and he instanced docks that were in existence in Newport, Cardiff and Barry and other places on the Bristol Channel. I suggest that those docks are not excessive for our present requirements; indeed, I think I am right in saying that representations have been made to the Government by the authorities responsible for those docks asking them to increase the existing facilities. If those authorities want the Government to extend the docking in peace time it seems that it would not be very easy in war time for the Royal Navy and the Mercantile Marine to use the existing accommodation, although I know that the Royal Navy can do what it likes in a time of emergency and that if it wants to use those docks for the purpose of docking war vessels it can do so. It is not suggested that both the Mercantile Marine and the Royal Navy can use those docks at the present time. The circumstances of the next war may be very different from those of the last. The only conclusion to be drawn from the attitude of the Admiralty on this point is that, whereas we had Queenstown, Berehaven and Pembroke Docks in the last War, now none of them is considered necessary. Not one of the three is available at the present time.
The Admiralty say: "We have all the facilities we want." That attitude will not bear examination. A study of the situation in the last War shows that even with those three bases in existence—I stress this point again—the docking facilities in the Bristol Channel were hardly sufficient for the Mercantile Marine which uses the Channel. Nevertheless the Admiralty say that they could have the full advantage of those places if any emergency arose. They say that on the basis of the experience of the last War, but what about the future possibilities? It is quite on the cards, as we have heard from the Front Bench, that the east coast ports may be very difficult to use, and if that be true with respect to naval vessels it must be even more true respecting the


Mercantile Marine. We may find ourselves transferring our ships for the safety of the country to west coast ports, and the strain on those ports will be far beyond what it is at the present time. That is without taking into consideration the additional naval vessels. The Civil Lord told us that all necessary steps were being taken to prepare suitable bases, but that is certainly not so in regard to the docks I have mentioned, where you have very good anchorage but no facilities for repair, for instance.

Colonel Llewellin: No, I did not say that there were facilities for repair but that there was a harbour there which ships could use.

Major Lloyd George: None of those harbours is available or suitable. It seems to me that, having lost Queens-towns, Berehaven and Pembroke Docks, it would not be safe to rely upon an anchorage with no facilities for repair at all. I ask the Admiralty to bear in mind that it is all very well for them to say that they can keep these docks for use in time of war; it is not the slightest use having an anchorage unless you have also facilities for repair. Whatever the expense, if the safety of this country is involved, the money has to be found. The only test should be the safety and security of this country. In view of the lessons of the last War I cannot understand the attitude of the Admiralty in saying that they have all the facilities that they need when those three bases are not in use, and I ask them to look into this matter. If we are to spend all this money on the Navy for the safety of the country let us see, when we have spent it, that the weapons which we have made can be used with the greatest efficiency.

4.54 p.m.

Admiral of the Fleet Sir Roger Keyes: There is no need for me to say very much to-day because many of the things which I have been saying for the last five years have been said from the opposite benches. I fully agree with the hon. and gallant Member for Pembroke (Major Lloyd George) as to the urgent need for developing bases on the West coast. I should like also to express my appreciation of the speeches made on the Navy Estimates by the right hon. Gentleman the Member for Hillsborough (Mr. A. V. Alexander). They have been most helpful. I entirely

agree with him as to the need for a smaller type of destroyer. I think that that was referred to the other day in the statement made by the Parliamentary Secretary. The displacement of destroyers of smaller type must depend of course on seagoing qualities and the range of action which will be needed. Having spent five of the happiest years of my life in command of destroyers of 300 tons I cannot help thinking that a very efficient vessel of 800 tons could be designed to do some of the work now being done by vessels of a bigger displacement. I have not discussed this matter with anyone at the Admiralty but I believe that that is also the Admiralty's view.
The vessels which the Admiralty have been sending into service of late are magnificent, and they were needed. A letter in the "Times" to-day from Admiral Sir Hugh Tweedie has been referred to by two hon. Members; I entirely agree with what he says. In the last year of the War I do not suppose anyone suffered greater anxiety than I did owing to lack of destroyers. Every night I had about 100 fishing craft, within easy striking distance of German bases, advertising themselves in a glare of light over a deep mine-field and protected by a few destroyers. One night they were raided by the enemy, who sank several fishing craft and killed about 70 fishermen. That was in February, 1918, but the patrol was maintained to the end of the War under conditions of hideous anxiety, not only for the fishermen on the patrol, who showed the greatest fortitude, but for those who were responsible for protecting them.
I remember a Debate about a month ago on the need for encouraging fishing fleets, fishermen being urgently needed by the Navy in time of war, both in men-of-war and in carrying out anti-submarine work. I do not agree with the Admiralty in the statement that was made, and I do not believe that it represents the Admiralty's view, that they do not need drifters. Of course they will need drifters. Drifters are the fishing craft which worked the anti-submarine nets. I think there was some misunderstanding about that matter. It was suggested that because they did not need drifters they did not need fishermen; of course they want fishermen, who are of the greatest value in the men-of-war and in their own vessels. I


remember the hon. Member for North Aberdeen (Mr. Garro Jones) saying that the men did not like serving in the Navy because they did not like brass stripes and Admirals. I am sorry to say that a naval officer on this side of the House said much the same thing. I would like them to come to one of the great rallies of the British Legion on the East Coast when they would see how those men turn out to salute their Admirals. I am sure that the hon. Member for North Aberdeen misrepresented the fishing population of his constituency.
I do not think there is anything else I want to say. I must congratulate my hon. Friend the Member for Londonderry (Sir R. Ross) on the amount he learned while he was acting as Parliamentary Private Secretary to the First Lord of the Admiralty. I do not agree with everything he said but he put up a good case for the Anglo-German Naval Treaty. Personally, I would shed no tears if that Treaty is denounced. I do not think it is worth the paper it is written on, although if it is left to them the German naval officers would, I believe, have adhered to it, as my hon. Friend said they have.

5.0 p.m.

Viscountess Astor: I have been in this House for nearly 20 years, and these Debates on the Navy Estimates are a very strange experience to me, for I have never seen such harmony and peace and such rallying to the support of the Navy. I pray that it will last. I do not believe there is anyone in the country to-day who would grudge one penny of the money we are spending on the Navy, and who does not thank God that we have got it. I wish that that had always been so. If it had, perhaps the situation in the world to-day would have been different. But I am not going to say that any one side is to blame for that; we are all to blame. This is not the time to accuse one another of shortcomings, and we do not want to become acrimonious, but, looking back, we can see that Members representing naval constituencies and trying to fight for the Navy in the last 20 years have had a very difficult time. The right hon. Gentleman the Member for Hillsborough (Mr. A. V. Alexander) and the hon. Member for North Camberwell (Mr. Ammon), when they were at the Admiralty, themselves had a very difficult time. They made a brave fight, and no one knows

it better than we do. They are now able to say that they did their bit to keep their party straight, and we are glad that they did.
For many years we have been pleading for the Navy as a police force. To-day we know that it may not be a police force, but may be the one thing that will keep this country from starvation. These are difficult times for us all, including those gallant men at the Admiralty to whom reference has already been made. As my hon. and gallant Friend the Member for North Portsmouth (Sir R. Keyes) has said, it is not the case that sailors and fishermen do not like admirals. It depends on the admirals. They are like other people. Not all sailors are popular, and not all admirals are popular, but when you get a good admiral, there is no one in the world that loves him more than a sailor. Therefore, I do not think that sweeping assertions ought to be made about sailors or fishermen not liking admirals. It is a pity that a wild, loose kind of statement should be made, perhaps because one constituent writes and says he does not like an admiral, that sailors generally do not lake admirals. Some of the best people in the whole of the Navy are admirals., and that has always been so.
I would ask the Parliamentary Secretary whether he would consider the question, which has already been raised, of a Royal Naval Volunteer Reserve depot at Plymouth. Surely, of all places in the country, there should be one at Plymouth, and I hope he will give that matter his deep consideration. I would also suggest that there should be an airport dock. I do not know whether it is possible, but, if it is, Plymouth is an ideal place for it, and I hope that that matter also will be considered.
When I look back and compare the conditions of the lower deck before and after the War with what they are now, it is almost like a dream come true. Nobody who has watched the Navy and the lives of the men of the lower deck could fail to appreciate what an enormous difference the increase in their pay has made in the position of their families and their general life. Many of us regret that there are not more promotions from the lower deck, but, again, that is not the fault of the Admiralty. It is not every man on the lower deck who wants to become


an officer. The real difficulty is in getting some of them to come forward for promotion. I have been interested in this matter on the educational side, and I know how difficult it is. The Navy is so full of tradition that it is difficult to get anyone to move; they get in, and they stay put, and it is very difficult to get them to move up, but I hope that eventually they will become more ambitious on the lower deck.
I should like to say a word about marriage allowances, for which we have pleaded so hard. The last Prime Minister knew all about these, because he had a. daughter who was married to a sailor, and she recognised how very difficult it was being married to a sailor without a marriage allowance. I hope the Admiralty will keep on at the Treasury, because we know it is the Treasury, and not the Admiralty, who stand in the way, although at one time there was a tradition in the Admiralty that they did not want married officers at all. We all know that; it came down from Nelson. But that belongs to the past. I remember, in one of the first speeches I made in this House, referring to the statement, so often made, that a sailor has a wife in every port, and saying that, so far from that being the case, the Admiralty did not give him very much encouragement to keep one wife in any port. That is not the case now, but I feel sure that, if the Admiralty could only see the hardships that are suffered by these young wives, they would be moved to make their allowances greater.
I do not quite agree with the criticisms which have been made of the Anglo-German Naval Agreement. I think we were right to make that agreement. I believe that Germany offered to France a somewhat similar agreement with regard to aeroplanes about five years ago, and I believe that, if such an agreement had been made, it might have had beneficial effects now. We are suffering to-day from the gross mistakes that have been made in the past, and I hope there will be no more mistakes. As long as dictators are in power in any country, no country can be trusted, although I think we were right to enter into the Anglo-German Naval Agreement. After all, it has been the whole policy of the Socialists to try to get agreement with other countries, no matter what their form of Government might be.

I am glad that we made that agreement, which, so far, has been kept by the Germans, though they may not keep it now. I pray that the time will come when we can get agreements with free peoples who will keep them, but, until that time comes, our Navy cannot be strong enough, and we cannot be vigilant enough. In the meantime, we must say to the German people, who, we hope and pray, will come to see reason, "Never again can we trust you as long as you are ruled by a dictator."

5.8 p.m.

Colonel Wedgwood: I agree with the Noble Lady that it is very pleasing to see the unanimous support that there is in the House for the British Navy, but I hope the Noble Lady will understand that, if there has not been that unanimous support in the past, it is largely because some of us have been suspicious of the British Navy. I think there has been a great deal too much pro-German sentiment in the British Navy—too much co-operation, too much interchange of social amenities—and I hope that that will come to an end with the Anglo-German Naval Agreement. The last 48 hours have changed the minds of a great many people in this country. We have discovered, not only a real danger for us, but a real unity which I hope will endure—a unity to resist any further advance by Herr Hitler in any part of the world.

Viscountess Astor: I am sure the right hon. and gallant Gentleman will agree that it is not necessary to condemn the whole German people, though we may condemn Herr Hitler and his policy?

Colonel Wedgwood: I am delighted to hear the Noble Lady condemn Hen-Hitler. I agree that our objection on this side of the House is entirely to the German Government at the present time. We shall never get peace until we have separated that German Government from the German people.
The Navy Estimates, in spite of the unanimous support that is being given to them at the present time, still need a certain amount of criticism, more particularly because, as has been pointed out by the right hon. Gentleman the Member for Hillsborough (Mr. A. V. Alexander) so much has changed, even since the Debate on Thursday last, that


it has become necessary to look at the British Navy in rather a new light. It is not only the denunciation of the Anglo-German Naval Agreement, with which we all heartily agree. It is more than that. I believe, and I think the House of Commons understands, that, if we are to say "Halt," and to mean "Halt," to the German Reich, it is necessary that we should get into close touch with all the other countries that are in like danger to ourselves. It is absolutely necessary that the whole question of defence should change, not in its essentials, but in its strategy. If we act in union with other countries who wish for law and order and peace, and if with them we are to come to a united decision to resist further aggression, obviously the British Fleet will have to fit into a large number of new problems. My chief charge against the Anglo-German Naval Agreement of three or four years ago is that it tacitly accepted the position that the British Navy was excluded from the Baltic, that the Baltic, so far as the British Navy was concerned, was to be a mare clausum.
Perhaps I had better preface my remarks on this question by explaining that I have some right to speak on naval questions. It is true that I do not represent a dockyard constituency, but I have twice held a commission in the Navy; I was a member of the Royal Corps of Naval Constructors; I am still a member of the Institute of Naval Architects, and my profession, if I have one, is the designing and building of warships. I may add that I received my promotion to the rank of commander from my hon. and gallant Friend the Member for Hertford (Sir M. Sueter); I never knew why. This must be my justification for saying something on this question of naval strategy.
All the naval people of my generation were influenced in their views on strategy by reading Mahan's "Sea Power," "Ironclads in Action" and various other books which came out with great effect in the nineties of last century, and the whole of British naval policy since that day has been based on the views of the great American, Admiral Mahan, who laid down as the principle of sea power that a fleet in being was the key to success—that, if your fleet was more powerful than that of the enemy, you would win. It was all right to take that gospel as the basis of strategy in the past, but I think

that those people of my standing and age who recently controlled the strategy at the Admiralty got so wedded to that policy that they cannot see that the changes which have come about through the development of the submarine and the aeroplane, and, above all, the change in strategy which must follow our different conception of the purpose of the British Fleet, must make the whole of Mahan's policy obsolete, and force us to study these questions afresh and discover the new sphere of sea power, and particularly of the British Fleet.
For instance, the question is much simplified if you know who exactly is the enemy you have to fight. Up to the present time, the Admiralty have been more or less basing their estimates and plans on fighting everybody. For the last three or four years they have been considering Japan and the Far East as the most probable sphere of conflict, and that it was against a war on our commerce coming from the Far East that the British Navy must be adequate to protect us. In past years, of course, they have considered wars with France, and even, I believe, with the United States of America; but latterly it has been either Japan or Italy that has bulked largest in the plans of the British Admiralty. As long as we waste our time thinking about Japan and Italy, we lose the necessary power to deal with the immediate, the dangerous, enemy.
During the War, when we were anxious to get troops from all over the Empire to fight the one important battle in France we tried to get division after division from India. We were met with a certain amount of reluctance on the part of the Indian Government. Finally, Lord Hardinge, then the Viceroy, telegraphed that if he sent more troops from India, English women and children would be endangered. Lord Kitchener, who, with all his failings, could put his finger on the spot, wired back, "It would be better to lose India than to lose the war; send the troops." That lesson wants rubbing in now by or to the new Minister for the Co-ordination of Defence. He is an ex-Admiral. He comes from the Board of Admiralty. Naturally, all the schemes that are now fructifying have been his schemes. It is he who has to perceive that there is this change in the objective of the British Navy, and to make new schemes. Unfortunately, it is always


difficult to get a man to change plans just when the plans that he has been working on throughout his life have come to fruition under his fingers.
The main difficulty is this idea that has grown up in the Admiralty that, whatever happens, the British Fleet will not be employed in the Baltic. Obviously, it cannot be employed in the Baltic if we are fighting Germany alone. We could not get through the Cattegat or find bases, and if we got into the Baltic we should be at the mercy of their submarines and aeroplanes. But if we are to get into the Baltic with the co-operation of the Russian Government, the Danish Government and the Swedish Government, there are all the possibilities of useful work in the Baltic, and, above all, the possibility of giving that one needed form of security to the Scandinavian States if they are coming into this new alliance for peace. If this league is not to be formed, if we are to continue for ever the policy of scuttle and retreat, it will be the end of the British Navy and Empire in any case. But now, when as we hope a new leaf has been turned, we are entitled to ask the British Navy to change its plans and adapt its policy to the new necessities of the situation, so as to provide that security for the Scandinavian States without which they cannot co-operate with us, and to provide the necessary protection for our merchant ships in the Baltic which will be even more important than protection for our merchant ships in the Mediterranean and the Western Ocean. If there is to be co-operation, if there is to be a binding together in any league for peace, to stop war, it depends on the cement of the British Navy to bind those allied nations together.
There is another point. Increasingly, the function of the British Navy has been that of defence; if it is to be of any use in the new circumstances of the world it has also to be capable of offence. When you are dealing with the narrow waters, such as the Baltic or the Mediterranean, offence is possible, believe me, if the Fleet Air Arm is capable of being used. Too often the Admiralty have regarded the Fleet Air Arm as a useful auxiliary to the Grand Fleet, in dealing with a Fleet action or in protecting our trade routes, by using the aeroplanes as scouts. If we got into the mind of the Admiralty we should see that these aircraft carriers have

been designed largely for Eastern waters, and that it has been with a view to the protection of commerce and action against the Japanese Fleet that they have been built. I regard them as being very dangerous structures owing to their extraordinary liability to being bombed from the air. I do not know whether they can be used for the Mediterranean and the Baltic. It is up to the Government to find out from the Admiralty whether, in view of these changed circumstances, they are useful in enclosed waters, and whether they could be used in the Baltic or the Mediterranean, or whether we ought to try to look forward to using aeroplanes from the Fleet in those narrow waters in different ways.
There is the question of developing the use of the catapult. The objection to the catapult hitherto has been that it is impossible for an aeroplane to get back to a small ship; once it has been flicked off, it has to sink or swim. But if you are operating in narrow waters, where you have large areas of land in the hands of friendly, allied Powers, it is a different thing. You could attack the Kiel Canal or Stettin or Danzig from the sea by air much more safely than bombarding them from ships, because there is the possibility of the aeroplanes getting back to friendly territory, where they will not be interned. That is a question which I do not believe has ever been considered by the Admiralty hitherto, and which is really the key to any successful Fleet action in the narrow seas under the new conditions of alliance.
There is one other point which I think is cognate. All these gigantic £8,000,,000 battleships have been designed for use against Japan in the Far East or against Italy. But they are not the right unit to use in enclosed waters. I remember that during the War the "Queen Elizabeth" was then our latest and best battleship. She was sent out to help us in Gallipoli. It was felt, directly the first German submarine got into the Mediterranean, that they could not possibly risk having the "Queen Elizabeth," which had cost £3,000,000, torpedoed and sunk. She was recalled immediately, and taken back to more protected stations. We remember how at the Battle of Jutland our main Fleet, consisting of ships as expensive as, if not more expensive than, the "Queen Elizabeth," was withdrawn from action


for the same reason. As you make your ships bigger and more expensive, it is inevitable that the Admiralty will be more reluctant to risk their loss, and, therefore, they are withdrawn from danger. In the last War they were put into Scapa Flow. I suppose that in the next war they will be put further away. Are they not becoming a liability rather than an asset? The Fleet is in being, it is true; but it requires another Fleet to protect it, at enormous expense, while the real naval actions of the future will be taking place, as they were in the last War, with the lighter vessels, such as destroyers, converted merchantmen and Q-boats, all doing the fighting work while the Fleet remained supreme, powerful and safe in Scapa Flow.
If it is going to be now a question of the enclosed waters of the Baltic, the English Channel or the Mediterranean, it is essential that we should realise that the smaller the battleship, the more effective it will be. The smaller it is, the more possibility there is of using it for risky purposes; getting back to the Nelson touch, and the old use of the Navy 130 years ago, of laying your ship alongside and not minding whether that ship goes to the bottom or not, as long as it does its duty while it is on top. So there is an additional argument, greater than all the arguments which have been put forward, for reconsidering this question of the big battleships and the aircraft carriers, and going back to that smaller type of craft—the 800-ton destroyer is about the best—which is capable of being lost, and also of moving swiftly in all circumstances and dodging in shallow waters.
Then we come to the supreme question, of the ship versus the aeroplane. That, too, we have to consider afresh. We have to consider it in the light of all that has happened in Spain, where there has been plenty of experience in that matter. I notice that the Secretary of State the other day placed his chief reliance, for the security of the ship, on the enormous strength of the anti-aircraft equipment at present. That, so far as it goes, is correct. The warship that is built to bring an overwhelming weight of anti-aircraft guns an any aircraft coming below 10,000 feet is safe as long as it can manoeuvre, dodge, and, above all, as long as it has

ammunition for those guns. The right hon. Gentleman knows as well as I do that no battleship can carry enough ammunition for anti-aircraft guns if the attacks are persistent and are renewed. The number and the weight of shell that these guns can fire in two minutes is such that no ship can keep reserves sufficient for the purpose. For the first attack or so you may have enough, but after that it becomes almost impossible to base the safety of the ship on the anti-aircraft fire.
I do not believe the right hon. Gentleman would put his faith, or even did put his faith mostly in anti-aircraft fire. Antiaircraft fire from the land is an entirely different matter from the anti-aircraft fire from the ship. In the first place you have a fixed platform, and therefore firing is much more likely to be accurate, and in the second place you can have unlimited supplies of ammunition on land instead of the very limited supplies which the design of the ship makes possible for you to carry afloat. I believe he puts his faith particularly on the fact that ships are now adequately protected from the air and from plunging fire, and that particularly the bigger battleships are unsinkable by bombing. Of course, that does not apply if you drop a bomb down the funnel, or on the steering gear, but in his speech he really carried the thing a bit too far when he alleged that plunging fire was more dangerous and had greater kinetic power than bombs dropped from the air. He must remember that a shell dropped vertically on to a ship has the same kinetic power as a bomb of the same weight dropped vertically on to a ship, which has no speed left from the initial explosion. The whole of the speed is due to gravity in both cases, so that the plunging fire is exactly the same from bombs as from shells—with this difference; the shell for its weight carries a much smaller explosive charge than a bomb. A bomb of 200 lbs. has 200 lbs. of dynamite, and a shell of 200 lbs. has 40 lbs. of high explosives. The plunging fire of a bomb is dangerous; it has not great penetration and does not do very great harm, but its explosion will be much more terrible and shattering to the ship and crew.
That is not all. Everybody seems to think that it is the life of the ship that matters and that if a ship is bombed or torpedoed and does not sink, it is all right. That ship has lived all its life for


that one action, and that ship, which is put out of action in a battle, might as well, from the point of view of the efficiency of the Fleet at that moment, be out of action for ever, and be sunk. If you can, by a bomb or submarine stop a ship from being used, as the "Lion" was stopped and countless others, as we remember, in the last war—it is not sunk, it is true, and the man power is not lost, and the ship can be repaired at less cost than making a new one, but for that battle, and that is all that counts—that ship is finished. Do not let us be carried away by the satisfaction that it cannot be sunk. If a big ship is put out of action, or the steering gear is put out of action, it might as well be lost. We have to take that into consideration when we consider the size of ships to be used in the Grand Fleet and when are discussing the doubtful problem of the ship versus the aeroplane.
Apart from fighting ships under air fire we have to consider the Mercantile Marine. I see that the right hon. Gentleman considers that the convoying of merchantmen, which was a great and beneficent discovery of the last War—will be equally efficient against aeroplane bombing, and as efficient against aeroplane bombing, as against submarines. I wish I could think so. In the first place, the merchant ships will not be protected themselves by antiaircraft guns. You are relying upon the convoying cruisers to protect the merchant-men. I do not think that it will be an efficient protection. It is true that it will be difficult to persuade any aeroplane to come down within 1,000 feet of a battleship fully armed with anti-aircraft guns, but when it comes to attacking a merchant ship, if you see an area of sea covered by these convoys, the enormous distance apart at which the convoying ships go, and the fact that the aeroplanes might drop from invisibility in a very few seconds, I do not think there will be quite the same security for the merchant ships as there is for battleships.
Take the case of harbours of refuge. In the last War we used Dover Harbour as a harbour of refuge where the merchant ships could collect and stop the night before they proceeded under convoy up the Thames or further North. A place like that will simply be a death-trap. There will be perhaps a hundred ships crowded into that harbour. It might be attacked by night or by day on very

inadequate notice being given to the people who were to be attacked. I wonder whether the House has ever thought what it is to be in charge of anti-aircraft guns in a place like Dover Harbour, constantly on the alert. You get five seconds warning of an attack which may not take place; you have to keep the people sleeping and living beside the guns; alert every minute. For the first day, week or month they may be able to keep it up, but they will not be able to keep it up after that. If they go on for a month without being attacked, they will get slack, and the attack when it comes will be all over before the gun is uncovered or the gun is laid. You may be able to fire at them after they have gone, but it will be poor consolation, if all your merchant ships are at the bottom of Dover Harbour, if a solitary aeroplane or two gets blown to bits by anti-aircraft guns, and the rest get away. By all means have anti-aircraft guns, but for goodness sake consider whether they are an adequate protection for merchant-men at night. If I were in charge of a fleet of merchantmen and had command of the sea, I would see that they sailed at night and kept up smoke screens during the day. I would not put them into a harbour of refuge. I would prefer the open sea, which is a far better refuge than a located harbour.
What I have said about the necessity of being always on the look-out on antiaircraft guns applies even more to the Fleet at sea than it does to the land defences of this country. It is extraordinarily easy to have people on the gun for a long time, but it is an impossible strain to ask them to be constantly looking out for that speck appearing only when it gets down to 20,000 feet, and only fully distinguishable as an aeroplane at 10,000 feet, but which can drop from 20,000 feet right down into the field of action, in 20, 25, or 30 seconds, and before you could possibly loose anything off unless you were looking for it. It is lack of notice of that sort of attack which is infinitely more dangerous than the tactical power of the aeroplane to bomb. In the case of all fleet actions you see the ship, or if you do not, you see the smoke of a funnel above the horizon and you know that they are going to shoot at you. You can call people to their stations and get cleared for action with plenty of notice. The German Fleet fleeing from the


Falkland Islands had ample notice to get five or six miles away before our Fleet got at them. But in the case of the air it is a very different matter. Therefore, provided aeroplanes can fly high enough, provided they can keep invisible, it is going to be very difficult. The best detectors in the world will not enable you to prevent the appearance of these machines being the first intimation you have that they are going to make an attack upon you.
I do not think we should be so confident, as the right hon. Gentleman appeared to be in his speech, in the contest between ship and aeroplane, that the ship is so infinitely stronger and more powerful than the new arm. I am confident that whichever country, whether it be the enemy or whether it be our new alliance, secures command of the air, they will have secured the victory in the war. If your aeroplanes dare not go up for fear of being shot down, as was the case in the Spanish war all is over. As soon as you got an overwhelming superiority on Franco's side in the Spanish war, the Government could not send an aeroplane into the air to fight against such odds. No one cares to go up to certain death. The same would apply in any European war. Directly command of the air has come to such a point that one side can smash anything on the ground or in the air, you will find that not only your merchant ships cannot move, that your armies cannot move by day, not only that your whole civil life will be put out of joint by the destruction of every nodal point and every power station, but that even your glorious Fleet itself, granted it has the power to save itself from being sunk by aeroplanes, will yet be unable to give any effective support to this country, although it will still be invincible from the air and invincible on the sea.
One lesson that I have learned from practical experience of the Spanish war is that no army, air force or navy can stand up, either morally or physically, against an overwhelming air force. Therefore, I beg of the Government and of the Minister for the Co-ordination of Defence to forget that the Navy has always been in the past the main prop of England's greatness, and to remember wisely that that prop may not be sufficient in future, and that every penny grudged to the Air Force and spent on any other form

of defence may mean the destruction of this Empire, and above all, the destruction of that liberty which we are now at last united to defend.

5.44 p.m.

Rear-Admiral Sir Murray Sueter: The right hon. and gallant Gentleman the Member for Newcastle-under-Lyme (Colonel Wedgwood) asked why he was decorated in the War. I can tell him. He got his D.S.O. for very great gallantry. The right hon. and gallant Gentleman has raised many important subjects in his speech, but I want, first of all, to congratulate the Financial Secretary to the Admiralty for the able survey that he made when he introduced the Estimates. He did it with the same skill this year as he did last year, when his chief was ill. There are one or two points in his speech which I should like to take up. The hon. and gallant Member has referred to battleships. The Financial Secretary in his speech said, "Imagine this Chamber multiplied 200 times, and you get the volume of gunfire that would be on an aeroplane attacking a ship." He did not tell us that an aeroplane can drop a phosphorus bomb, and after the spattering of a battleship with a phosphorus bomb—and I have a picture here of the American experiments—I do not think the anti-aircraft guns would function very well. We have an example in the bombing of the ''Deutschland." The "Deutschland" was bombed by two Spanish Government machines. The gunners of the "Deutschland" had the sun in their eyes, and the German admiral tells us that they did not fire on the two machines, because, as the sun was in their eyes, they could not do much damage. The two machines attacked the "Deutschland" and scored one or two hits, and the "Deutschland" went into Gibraltar with 30 of her crew killed and 60 wounded. I was told by someone who was at Gibraltar at the time that the morale of the crew of the "Deutschland" was destroyed and broken up just like a regiment which had been badly mauled in battle. The "Deutschland" was a modem pocket battleship, and that was the effect of the bombing of it.
If you drop a bomb on one of our large displacement battleships and it drops anywhere in the vicinity of the three turrets, one turret is sure to be


put out of action, and the battleship loses 30 per cent. of her effective gun power. Also, as the right hon. and gallant Member for Newcastle-under-Lyme said, if a bomb drops near the rudder, that is if it is a near miss, and it throws up a water projectile which may hit the rudder or propeller and might cause the main shaft to be out of the true, that battleship becomes a lame duck. The "Marlborough" was hit by one torpedo and had one of her main compartments flooded, and she was turned into a lame duck. We are building seven battleships, which will cost between 60 and 70 million pounds. The upkeep of each battleship will be nearly £500,000 a year. When one looks at the condition of the world to-day and one thinks of any war that we may be likely to be in, I very much doubt whether it is wise to put all this money into battleships. I agree with my right hon. and gallant Friend in advocating the building of the smaller battleships. To put £70,000,000 into these seven battleships is a waste of money when we are not getting the right weapon. I would ask the Financial Secretary whether there is any justification for raising the tonnage of the battleships to 40,000 tons. Can he tell us whether Japan is doing that? The gallant Admiral the Member for Paddington, South (Vice-Admiral Taylor) raised the question of these monster battleships last year. I would rather see some of the money put into smaller vessels like the smaller destroyers and other smaller type of ship for hunting submarines.
Now I come to the question of submarines. The Financial Secretary said that the menace of the submarine in any future war will not be as serious as it was in the last war. I saw in a daily newspaper after his speech the heading, "The submarine is mastered." I would ask the Financial Secretary how he can justify that statement. He told us that he had been in a warship at Malta, hunting submarines. When I read that in the Press I was very pleased, because it showed that he takes great interest in his work. He has given his experience in this respect, and I will put up my experience. I fired the first torpedo in the history of the world that was ever fired from a submarine when running submerged. I have been a student of submarine warfare for 37 years. The Financial Secretary informs the House that the

submarine menace is not likely to be what it was before. I would ask whether the submarine has stood still. The submarine has made good progress. The hon. and gallant Member, who was a naval architect, knows that the hulls have been stiffened since the last war, the motors have been made more silent, and the range of fire is far greater than in the last war. Therefore, I beg to differ from the Financial Secretary when he says that the submarine has been mastered.
What is the submarine strength of other Powers? Germany at the present time has 71 submarines, and she can build up to another 41,000 tons. She may then have 150 submarines. Japan has 100 submarines and Italy probably 70. That is an enormous number of submarines against this country. The Financial Secretary gave numbers to show how the submarine menace decreased in the late War. Why did it decrease? Because of the vigilance of our surface craft and our aircraft, which were always hunting the submarine. The submarine captains got tired, but if war started now, they would not be tired but would be as fresh as paint, and we should lose a tremendous number of our ships. In the last War we lost 11.000,000 tons of shipping, and out of that number we lost 6,750,000 tons on account of submarine action. The whole question of protection against submarines needs to be looked into.
That brings me to another point, and that is the use of the destroyer. The destroyer was of great use, and we certainly need a far greater number of destroyers than the two flotillas laid down in these Estimates. What was the other weapon used in the war against the submarines which was so succesful? It was the little airship. We built 200 of these airships at the Admiralty and supplied 24 to our Allies, some to Italy, some to France, some to the United States. These little airships patrolled 2,250,000 miles and had only one fatality due to enemy action for every 50,000 miles patrolled. Some of these airships made very long patrols. Whenever we used these small airships patrolling we never lost a single food ship or a single ship carrying raw materials for our factories. At the end of the War all the merchant shipping captains always asked for the airship patrol, because the aeroplane and the seaplane went over rather too quickly when


they were looking for the submarines, whereas the little airship could hover, go to windward, and drift back. I should like to know whether the Admiralty are doing anything or whether they have been in consultation with the Air Ministry in regard to the question of introducing airships again. This question should certainly be looked into very carefully, because they were of such great value in the last War. [An HON. MEMBER: "The paravane."] Yes, the paravane, which was invented by Commander Burney, did great work, but I am speaking of airships and asking the Financial Secretary whether the question of the small airship is being looked into again.
The Financial Secretary also spoke of the Fleet Air Arm. I was interested very much in what he said on that subject. At one point he said that the Fleet Air Arm is now a better colour and is putting on weight, and he also said he hoped that he had justified his claim that the tiny child had started to put on weight. When the Financial Secretary makes a statement of that sort he ought to qualify it a little. I had the honour of creating the Royal Naval Air Service, and I had many gallant officers who lost their lives in it and many gallant officers who are now left in this country. We handed over to the Admiralty one of the most efficient services. What did they do with it? They strangled the young child and then threw it overboard. That is why we had a single service. Now, they have started a small Fleet Air Arm, and the Financial Secretary refers to it as a tiny child. It is a tiny child because of faulty Admiralty administration. He ought to have qualified his statement by saying that it is tiny child through the maladministration of the Admiralty. I want to see a very strong naval air arm. I want to see it as efficient as the Naval Air Service was in the Great War. I would warn the House against any duplication between the Naval Air Arm and the Royal Air Force, otherwise we may have great and unnecessary expenditure. I have heard some people discuss the question of creating another military air arm. In that case we should get the old competition between the military, the naval and the Royal Air Force services that we had before. We should do everything we can to avoid that state of things.
The hon. and gallant Member for Pembroke (Major Lloyd George) mentioned the question of Pembroke Dockyard. I am certain that our eastern and southern ports will not be able to be used in a modern war. The teaching of the Spanish war was that when aircraft came to seaward they did not know that they were being attacked until they had dropped their bombs. In the case of Chatham, Sheerness, Portsmouth, and Devonport, we might not get any warning. Therefore, I think dockyards ought to be developed further away. My knowledge of Pembroke Dockyard extends over many years, and the question of bringing it up to date should receive the attention of the Admiralty. Unnecessary expenditure should not be put into our eastern and southern ports, but any money available ought to be used to develop ports further away. It may be said that modern aircraft can attack any port in the United Kingdom. That is true, but the hostile aircraft would be longer over our territory in attacking the ports further away, and our aircraft could attack them and, we hope, bring them down. We certainly ought to look into the whole question of having our principal port somewhere on the West Coast.
The Financial Secretary said not long ago, when talking about the Langstone air base, that Portsmouth was the principal naval port. I would ask whether it is the view of the Committee of Imperial Defence and the new co-ordinating Minister that our principal naval port should be Portsmouth. I submit that we ought to build a port with docks capable of taking any of our battleships at some other place a little further away from possible enemy attack than Portsmouth.

6.0 p.m.

Mr. Alan Herbert: My hon. and gallant Friend the Member for Hertford (Sir M. Sueter) had no need to justify his interesting intervention in the Debate. The right hon. and gallant Member for Newcastle-under Lyme (Colonel Wedgwood) also sought to justify his intervention, if I understood him correctly, by mentioning that he was a constructor of battleships, though I do not think he need have based himself on that narrow ground, considering the very wide field of tactics and strategy in almost every


element that he covered. One of my constituents, I am told, a Dean of the Church of England, made the indignant, inaccurate, and, I think, unchristian complaint, that the University of Oxford was now represented by a buffoon and a boat builder. I have always assumed that I was the boat builder. May I claim another small justification for taking part in this Debate? For the last year of the War I had the honour to serve in the convoy section of the Admiralty, a remarkable section. It was headed by a paymaster and composed almost entirely of paymasters and people like myself, invalided infantry officers. But, overriding all was, among others, that great man Admiral Sir Reginald Henderson, who did so much for the inception of the convoy system. I was delighted to hear the noble and well-deserved tribute which was paid to Sir Reginald Henderson by the Parliamentary Secretary in his speech last Thursday.
We boast now, and, rightly, of the effectiveness of the convoy system, but I agree with those hon. Members who say that we ought not to assume too much that the conditions in the next war are going to be the same as they were in the last war. We assumed then that we had command of the seas up to two days' steaming from these shores. A convoy going through the Mediterranean was escorted by destroyers for two days and then accompanied for the rest of the voyage by an armed merchant cruiser. Convoys coming across from America were in the last year of the War escorted by an American cruiser till, I think, two days out from England. We must remember that in those days we had a strong and important force of American destroyers at Queenstown, but I remember Admiral Henderson being many times very worried about the problem of "making two destroyers meet," so to speak. I went out in a convoy myself in the last year of the War with the Commodore from Liverpool to Port Said. We were escorted by the destroyers two days out; and then they left us.
Even then there were great alarms and anxieties about submarines off Lisbon. As has been said, it may be that the conditions off the Spanish coast: will be very different in what is euphemistically called the next emergency. That is the

somewhat small amateur message that I have to deliver. I do not know what the figures are in regard to building, but I most heartily support, from my small experience, anyone who says that we ought to have more destroyers rather than fewer. I add my humble compliments to the representatives of the Admiralty on the Front Bench for the way in which they have represented their Service and for the way in which they are discharging their difficult and most important duties.

6.4 p.m.

Mr. Gallacher: Some reference has been made in the Debate to the fact that the sailors do not like the Admiralty. I am not going to discuss that other than to say that if the Admirals in this House are a fair sample of the Admirals in the Navy there is every excuse for the seamen's antipathy to the Admiralty. We have also had a reference to the fact that the tradition of the Navy has prevented men from the lower deck rising to commissioned rank. The tradition of the Navy is that the sons of the working class shall occupy the lower deck and the "old school tie" brigade occupy the position of officers. That is the tradition, and there is the greatest difficulty in breaking it down. I am certain that if the Admiralty consider the future expansion of the Navy and the work that will have to be done, they will break down this tradition, and open up every avenue to the men of the lower deck to occupy positions which they are capable of occupying.
There is another matter which has not so far been discussed. If war should come, there will be the greatest possible need for a very large number of engineers to carry out all kinds of repairs. Today the situation is very serious from the Admiralty point of view. During the last War the most profuse promises were made to the engineers as to what would happen when the war was over if only they would give up their trade union rights and accept whatever was imposed upon them by the Government. They were to get an entirely new status in industry. When the War was over every promise made to the engineers was either broken or forgotten. Hon. Members opposite need not chide Hitler with breaking promises; they are as good as Hitler at breaking promises. The promises they made were broken. What was the result? The engineers were left to the mercy of the most


rapacious profit mongers in industry in this country. Their wages were cut down or kept down, and the result was that they went from the industry into other industries, and to-day engineers are earning better wages driving tramcars and buses than they could get as engineers. That is the situation which the Admiralty have to face. There are large groups of engineers who would not go into an engineering shop because they would have to goat lower wages than they have in their present jobs. Yet if war came upon us, one of the greatest and most urgent needs of the Admiralty would be a supply of skilled engineers, and I should like the Minister when he replies to say something on this matter.
The right hon. Member for Hills-borough (Mr. Alexander) drew attention to the submarine menace, and an hon. Member opposite argued that Germany had been building short-range submarines. When the right hon. Member for Hills-borough drew attention to the fact that Spain provided splendid opportunities for bases for the small-range submarines, the hon. Member hazarded the opinion that Germany could have had no knowledge of what was going to take place in Spain when she set out to build short-range submarines. It was in 1935 that Germany decided on a policy of short-range submarines. When did the trouble start in Spain? The hon. Member opposite thinks it was in 1936. That is not the time when the German started in Spain. The Nazis were as active in Spain in 1935 as they have been recently in Czecho-Slovakia. Does any hon. Member doubt the menace which this constitutes to the British Navy? Does any hon. Member doubt that the Germans will use these Spanish bases? I think it was the "Evening Standard" around Easter 1937, which gave an interview showing that the preparation for revolt was being actively pursued and financed early in 1935, and it is clear that Germany has had in view all the time these bases for her short-range submarines.
When I listened to the Parliamentary Secretary discussing the Navy and the proud and optimistic picture he gave us of the strength of the Navy, I was reminded of the Secretary of State for War. He gave us a speech of a similar character about the Army. What I said

about the Army I say about the Navy. The Secretary of State for War claimed that the Army is stronger to-day than it was 12 months ago. I assert that the position of the Army is worse than it was a year ago; and the same is true of the Navy. The Parliamentary Secretary can argue that the Navy is stronger in certain kinds of ships and in new methods, but from the strategic point of view I assert that the Navy is in a far worse position to-day than it was 12 months ago. No man of any sense who understands the position will dispute that point of view. We have representatives of the Admiralty coming to this House as representatives of the Admiralty and saying, "We have strengthened your Navy," but they do not tell us that as members of the Cabinet they have worsened the strategic position and that the Navy cannot possibly serve the country as it could have done 12 months ago.
What is the position in the Mediterranean with Italy controlling the Eastern part and Germany the Western part; with their heavy guns and their aeroplane depots at various points as well as on the North Coast of Africa? The right hon. Member for Carnarvon Boroughs (Mr. Lloyd George) in one Debate asserted that the heavy guns which Germany had on each side of the Mediterranean made it impossible for British ships to sail in the Mediterranean, and the Admiral on the other side, the hon. and gallant Member for Portsmouth (Sir R. Keyes) interjected a remark that it was still possible for British ships to get through the Straits of Gibraltar in the night time under a heavy smoke screen. That is the position. And what does it mean from the point of view of naval strategy. If Germany gets into Rumania and gets supplies of oil and a route through to the Black Sea, how is that going to affect naval strategy? The whole circumstances, so far as the British Navy is concerned, are of a most menacing character. It is impossible to discuss the British Navy as something in itself, as some sort of an ornament which you keep for showing to visitors who come to this country. The British Navy can only be discussed in relation to the general strategic situation which has developed in Europe and throughout the world. It has been pointed out that, with the submarines and aeroplanes which the Axis Powers


have now, the British Navy is in a very vulnerable position.
The only possible hope for the Navy carrying out its work of defending the food supplies which must come to this country and of protecting this country from attack is that it should have bases and support in different parts of Europe and the world. The Navy must have those bases and that support, and, therefore, we cannot discuss the Navy without taking into account the all-important factor of the allies that can be obtained and the arrangements that can be made with them, for providing bases and all kinds of support for the Navy. I consider this to be of the most vital importance to the people of this country. If the Admiralty are concerned with the Navy and with the Navy playing the part it could and should play, then they should be anxious to see that those who are responsible for bringing about the new relations that would provide the Navy with the bases and support it would require are those who believe in the policy which that work represents. While the Admiralty are supporting those who do not believe in such a policy, those who have destroyed the strategic position in Europe as far as the Navy is concerned —while the Admiralty are supporting the present Prime Minister and those associated with him—the Navy of this country is being betrayed.

6.17 p.m.

Vice-Admiral Taylor: The only reply that I would make to the hon. Member for West Fife (Mr. Gallacher) is that Italy does not control the Eastern part of the Mediterranean and Germany does not control the Western part of the Mediterranean. We are still the dominant Naval Power in the world, and we control the Mediterranean.
Most of the points that I intended to raise have been raised by other hon. Members, but I would like to endorse everything that has been said about the absolute necessity for having an abundance of small craft, and more than it is proposed to have at the present time. These small craft are absolutely essential. I also want most strongly to reinforce the remarks of several hon. Members concerning the necessity for a base at Milford Haven on the west coast. With regard to the ports in Southern Ireland, from which such excellent work was done

during the War—the American destroyers, under Admiral Bailey, working from Queenstown, did admirable work in safeguarding our trade routes—it is very problematical whether those ports will be available to this country in any future war. We have given over those ports to the Irish Free State. I understand that the Irish Free State have promised to keep the ports in a proper state of repair and ready for use, if they should be required by us, in any future war. I wonder whether that is being done. I rather doubt it. In any case, I do not think we can rely upon our obtaining the use of the ports in Southern Ireland. That would be a most difficult position for us to be in; it would immensely increase the difficulty of protecting the trade routes and covering the Mercantile Marine coming up the Channel; it would increase the voyage out and the return of craft taking part in that work, and necessitate increased numbers. It is absolutely essential, therefore, that we should have a base at Milford Haven.
Like my hon. and gallant Friend the Member for Hertford (Sir M. Sueter), I have always been most strongly opposed to the building of 40,000-ton battleships. They are an anachronism, and they are not required. They are far too big. To say that because Japan might build 40,000-ton battleships, we must start building them, is a very poor argument. In my opinion, it would be far better to spend the money on building a smaller type of battleship and the smaller craft which would be so urgently required. If that were done, I believe the efficiency of the Navy would be increased. I do not know whether it is too late for the Admiralty to reverse their policy of building those monstrous battleships. I wish they would do so, and revert to a smaller type. We could have more of the smaller craft, and more guns mounted in them, and in my opinion, the Navy would gain by the change.

Sir Robert Tasker: Could the smaller ship carry the big guns?

Vice-Admiral Taylor: No. If the size of the battleship were reduced, it could not carry 16-inch guns. These large ships carry nine 16-inch guns, three in a turret, and three turrets all close together; and as my hon. and gallant Friend the Member for Hertford has pointed out, if one turret were put out


of action, one-third of the arms would be lost straight away. That is a most serious position. With a smaller ship the guns would be mounted two to a turret, there would be more of them, and they would be spaced further apart. I know the answer is that, given the weight of armaments to protect them, it would be necessary to sacrifice something else; but I would prefer to do that, for there would be smaller guns, more of them, and greater rapidity of fire. I would much rather have a fleet of ships of that sort than these 40,000-ton battleships.
I am rather concerned about the Fleet Air Arm and the turn-over from the Royal Air Force to the Admiralty, especially from the point of view of bases. That has not yet been done. It is essential that the Navy should have complete control over the bases from which their own craft will work. I cannot see what is the difficulty. I hope that the Admiralty will take every step to overcome any difficulty that there may be in turning over the Fleet Air Arm from the Royal Air Force to the Navy.
Another point that I wish to bring to the notice of the Parliamentary Secretary concerns Malta. Malta is extremely vulnerable to air attack owing to its small size and its very congested conditions. The Parliamentary Secretary knows that the dockyard and all the other works are clustered together within a small compass. Aircraft will play a very important part in the defence of the dockyard, in defending trade in the Mediterranean, and also in active operations against enemy aircraft attacking Malta. I understand that all the accommodation for aircraft, whether aeroplanes or flying boats, is either in aerodromes on the ground or simply in hangars by the shore or attached to buoys. I want to ask whether anything is being done to provide underground accommodation for these aircraft; by that, I mean accommodation which would enable the water-borne aircraft to go straight in from the sea through an entrance that could be blasted out of the rocks at Malta. Malta is composed of very soft rock, and it would be quite a practicable proposition to provide underground accommodation for these essential aircraft. The vulnerability of these aircraft is a very important matter. It would not be an easy or a quick operation to replace the aircraft if they were

destroyed at Malta. The underground shelters would provide infinitely greater protection from damage by air attack, and one could be certain that the aircraft would be available when needed. I hope that something is being done in this direction.
In conclusion, I would like to add my congratulations to the Parliamentary Secretary upon the way in which he presented the Estimates. I am quite sure that everything that he can do will be done in the interests of the efficiency of the Navy.

6.27 p.m.

Lieut.-Commander Fletcher: I want to do what is common form in this Debate, and support the remarks made by the hon. and gallant Member for Pembroke (Major Lloyd George) about Pembroke Dockyard. I have this personal interest in the matter, that during the War I was, for a short time, stationed in the Bristol Channel in connection with the arming of merchantmen, and I came into contact with the ship-repairing yards in the Bristol Channel, and was able to gather a great deal of knowledge about the docking and ship-repairing facilities in the West of England. From what I heard then, and from the study that I have since made, I am sure that the facilities in the West quoted by the Civil Lord in his speech would not be adequate for the docking and repairing both of Naval ships and merchantmen in time of war. As the pressure of events becomes greater, the Admiralty will have to reconsider their decision.
There are one or two points that I wish to raise in the hope that the Parliamentary Secretary may be able to refer to them in his speech. First of all, I wish to ask a question about the Royal Yacht. I am sure that everybody was glad to hear, in reply to a question the other day, that the new Royal Yacht is to be so designed that she will be capable of performing some useful work in time of war; but I would like to ask whether it is not possible also so to design her that she can perform some useful work in time of peace. I cannot help feeling that it is not a good thing for the officers and men employed in the Royal Yacht to have no duties to perform from one year's end to another which give them training under actual service conditions. I should like also to ask what the draught of the new Royal


Yacht will be, as I believe that the old Royal Yacht was unable to visit certain French ports on account of her draught. Lastly, can the Parliamentary Secretary tell us what are now the conditions concerning what is known as promotion from the Royal Yacht? Is it indeed the case that officers who are promoted from the Royal Yacht are promoted by virtue of their service in the yacht, or, are matters so arranged that they happen to be serving in the Royal Yacht at the time when they become due for promotion? In these days the struggle for promotion is so keen, officers work so hard for promotion, and it is such a disaster for many of them if they fail to get it, that I feel with great respect to what is involved in service in the Royal Yacht, that there should be no more privileged promotions of this sort. Knowing how much promotion means to the individual nowadays, I think that anything in the nature of privileged promotions should come to an end.
I hope we may be informed of the position in regard to the proposed transfer of Keyham College. I understand that a site has been acquired and that a change is contemplated. Perhaps we may hear when it is to be carried out. I would also like to bring to the attention of the Parliamentary Secretary a small matter in regard to mobilisation. A copy of the "Cape Argus" has been sent to me, from which I find that in the Union Parliament, a member asked
whether it had been at the request of the Union Defence Department that a paragraph was included in the Simonstown mobilisation order of 28th September, addressed to reservists of the Royal Navy, to the effect that Union citizens would not be compelled to obey the order until called up by proclamation of the Union Government, and also why such a paragraph had been included.
The reply was that the Minister "did not consider it in the public policy to give details about the mobilisation." The member went on to ask
whether the attitude of the Union Government in regard to the mobilisation of reservists was intended to be helpful or hostile.
I do not know whether this matter has been brought to the attention of the Admiralty. I quite understand that we have no jurisdiction over a Dominion Government, but it would be interesting to know what the position is in regard to these reservists.
I would also ask that we should be told something more about the excess expendi-

ture on the "Research" which I mentioned last Thursday. Incidentally, on Friday morning I received from an official of this House a communication pointing out that I had filled in a railway voucher for Birmingham, instead of Coventry as I am entitled to do, and asking for my observations on the subject. The amount involved is 3s. 9d., and I could not help marvelling at an accounting system which so speedily runs to earth an item of 3s. 9d., while apparently the Admiralty can run an estimate of £70,000 up to £206,000, without going through the formality of consulting the Treasury. Comparing the two incidents and setting my 3s. 9d. against the trebling of an estimate of £70,000, I thought it a classic example of "penny wise, pound foolish" in Government accounting.
Then I wish to call attention to the reply of the Civil Lord on the points which I raised about the representation of grievances in the Navy. My hon. and gallant Friend the Member for South Paddington (Vice-Admiral Taylor) is not, unfortunately, in his place, but I think I can say that his outburst against me on Thursday and the harsh and intemperate language which he used about me, gave some point to the remarks which I made about the necessity for adequate powers to represent grievances. I acknowledge the very courteous reply of the Civil Lord, but I think it was erroneous in certain respects. He said that the right of a junior officer to report the misconduct of a senior officer had not been exercised except in what is known as the "Royal Oak" case. That is not so, because I quoted several instances in which that right had been exercised, and if the matter is in any doubt I can quote another case of a first lieutenant who put his captain under arrest for drunkenness and abuse of subordinates. He could not do that under the new regulations. To the best of my knowledge and information, the Civil Lord was also mistaken in saying that the new naval regulations in this respect are in line with the Army regulations. I must point out that Section 43 of the Army Act—and I speak with great deference to an officer of the other Service—specifically authorises complaints on any subject, and states that no one is to be treated with harshness or suspicion for making such complaints.
The Civil Lord also said that the misconduct of an officer should be observed


by his senior officer, and that it should not be the function of a junior officer to report the misconduct of a senior because that misconduct would be observed by a still more senior officer. I must be allowed to inform the Civil Lord that the conditions of service in the Navy are such that no one with experience of the Service would say that it was possible for a senior officer to be certain of observing the misconduct of other senior officers serving under him. In any case I would put to the Civil Lord the case of a ship on detached service. In such cases occasionally commanding officers develop a very autocratic frame of mind and in those circumstances who is to observe possible misconduct on the part of the captain of the ship? I believe that the new regulations issued by the Admiralty conflict with the Naval Discipline Act, but however that may be, it cannot be denied that they specifically take away the right of a junior officer to report the misconduct of a senior officer. It is not those who are indifferent to the state of discipline in the Navy who believe that harm is being done to that discipline by taking away that right.
Another point is the design of warships. I shall not go into details but there is no question about the fact that the design of our warships causes a great deal of uneasiness and anxiety to those who study the matter. Ships of extremely bad design have, over and over again, been inflicted on the Service. The May Committee dealt with this among other matters, and said that
it is common knowledge that various opinions arc held in the Navy itself as to the wisdom of the policy embodied in certain designs of ships of war. We recommend that the Government should appoint a representative Committee to inquire into the whole subject of Navy design.
May I ask whether anything has been done to give effect to that recommendation, and also whether it is the case that the Naval Constructors alone are consulted in regard to the design of warships or whether the services of the Institute of Naval Architects are utilised? That Institute commands a great fund of valuaable professional opinion. Would it not be wise to make some use of their advice and knowledge in regard to the design of warships?

Mr. Boothby: Can the hon. and gallant Gentleman say which ships of recent design he has particularly in mind?

Lieut.-Commander Fletcher: I have given the details in previous speeches. Obviously the battle cruisers during the War were of faulty design, and submarines have been built since which have been found completely unsatisfactory. In fact, in one case the Naval Staff has never been able to assign any role to a submarine because of her design. I assure the hon. Member there are many instances. I wish to add a few words on the subject of destroyers. The destroyer nowadays seems to be a very expensive compromise. What is the main function of the destroyer? Is it to attack the enemy battleships by day? If so, the destroyer is rather slow to deal with the enemy's screening ships. In fact, I would ask, Does the modern battle fleet fear destroyer attack, and will a modern battleship sink if hit by a torpedo? In any case, are not aircraft a more efficient means of launching torpedoes at an enemy ship than destroyers? Aircraft can press home an attack against battle shipslying in a defended harbour which destroyers cannot. Aircraft are more difficult to hit, have greater powers of surprise and attack, and are cheaper than destroyers. Again, battleships depend upon destroyers for anti-submarine and mine-sweeping work without which a battle fleet cannot go to sea. The battle fleet also want destroyers for night searching, shadowing, and screening.
All this raises the question of the function of the destroyer. Is she for attack on the enemy battle fleet, or is she a maid-of-all-work? I notice that the gap between cruisers and destroyers is diminishing. Since 1935 destroyers have grown from 1,400 tons to just under 2,000 tons. The French destroyer "Mogador" is of 2,884 tons and carries eight 5.5-inch guns and has a speed of 38 knots, and you have to set her against our cruiser "Achilles," which carries only eight 6-inch guns. The largest destroyer extant is 2,600 tons, and the smallest light cruiser is 3,500 tons, so that cruiser and destroyer have now approached to within 600 tons of each other. I suggest that it is time the Naval Staff set up a committee to frame a questionnaire on those points, and to pick the brains of the destroyer officers in order to decide what is


the function of the destroyer and what is the best type of destroyer to fulfil that function. I bear in mind the fact that it is necessary for us to have destroyers capable of dealing with foreign destroyers now in commission, but I believe that a committee of that sort would serve a very useful purpose at this moment, although I am not prone to encourage the creation of committees.
Finally, I wish to raise briefly a matter which I raised last year concerning the contracts between the Admiralty and the British Power Boat Company. I am glad to see that since I raised that matter the building of these boats has been thrown open to firms other than the British Power Boat Company, and I am sure that the competition will be a benefit to the Navy and also to the firms concerned. I asked the Admiralty for an inquiry of a nature which would give immunity to the witnesses, many of whom, obviously, would be serving officers. The Admiralty have not held an inquiry of that nature. They conducted an inquiry into their own conduct. They sent for all the papers on which approval had been given for what had been done; they looked at the papers and said everything had been approved and therefore everything was all right. But I understand that no officers conversant with the matter were sent for, and obviously the inquiry was of a very limited nature.
A statement was made in circumstances which precluded any reply on my part, and I have had no opportunity of making any reply until to-day. I gratefully acknowledge the references which the then First Lord, the right hon. Member for St. George's (Mr. Duff Cooper) made as to my motives in raising the matter. Of course, I was naturally and inevitably wrong on small matters of detail, but I have nothing to withdraw about the main statements that I made, which even the Admiralty statement confirmed in certain particulars. The boats were not the best obtainable, the price paid was extravagant, the Admiralty had virtually given a monopoly to the British Power Boat Company in this matter, and there were very grave questions indeed arising out of the engines installed in those boats. As regards this inquiry, we were told that these boats had to be got in a hurry because of the Abyssinian crisis. As a matter of fact, none of them went

out to the Mediterranean until nearly two years after the Abyssinian crisis.
Here are particular questions which I should like to ask in regard to the inquiry held by the Admiralty themselves: Were the engine numbers of the engines supplied to the first flotilla of these boats ever checked? Were the Napier factory records of these engines, showing when they were built and to whom they were delivered, ever checked? Did the Admiralty engineer overseer witness the delivery and installation of the engines? Did he witness bench tests? Did he see the engines stripped after test? All that is perfectly normal Admiralty procedure, and I should like to know whether it was set aside in the case of these boats. If it had not been set aside, the Admiralty engineer overseer would certainly have noticed the reboring of these engines, which had undoubtedly taken place. I should like to know whether the engineer-in-chief at the Admiralty ever wrote any minutes to the controller reporting against these engines, and did the engineer-in-chief of the Mediterranean ever report that several engines were found to have been rebored, or did other serving officers so report? Was the reboring of these engines reported on to the Admiralty by serving officers? The answers to these questions obviously could not be given by serving officers at an Admiralty inquiry. It would be quite impossible for them to do that. The answers would have to be given at an inquiry of a very different nature.
Since that statement was made by the Admiralty I have received considerable correspondence on the subject, and a flag officer expressed himself about these particular boats in terms which I should certainly not venture to employ in this House. I have a letter from another flag officer, in which he said:
I did not expect all the allegations to turn out correctly, but in this statement"—
that is, the First Lord's statement—
there is altogether too much whitewash. However, you have applied the ginger and it will have a good effect.
I must also quote from another letter, because it contains the whole gist of the matter. It comes from a most reputable correspondent, whose bona fides I have taken the trouble to check:
I am not happy that the true facts of the case have been brought to light, and that the


answers given are in any way in accordance with the real state of affairs. The other day I was on board one of the motor torpedo boats and an engineer-officer told me quite openly that not only were some of them found to have been rebored prior to being opened up for overhaul, but that owing to the fact that the engines had been used previously the water-jackets had rusted through to the cylinder liners from the outside. On more than one occasion water was discovered to have got into the cylinders, due to the piston having worn its way through the liner. As all this apparently occurred within 18 months of delivery date of the motors it is impossible to believe that they were in a new condition at the start. These facts and others can only be elicited by calling evidence from such officers as young engineers, who could not possibly be called without a guarantee of immunity. Also, close examination of engine numbers, test sheets, works notes/log books, etc., will establish exactly where the second-hand engines have gone to, or alternatively, when the new ones were built. I have no connection whatsoever with the boat-building trade but have many friends who are serving naval officers and who have expressed themselves as being extremely dissatisfied with the present position. I also know personnel in the Admiralty who are perfectly well aware that the replies given in the House do not in any way give a true picture of the facts.
I think that letter is a very strong condemnation indeed of the statement issued by the First Lord. I would also refer to another document which I have with me. It is a receipt given last year for two engines at a ridiculously low price, which it is stated are similar to those supplied to the British Power Boat Company.
I say this in conclusion: I had two objects in raising the question of these boats. The first was to try to make sure that the officers and men who serve in them and who, if war comes, will have to perform some of the most hazardous tasks which will be allotted to any officer or man in the Navy, shall have the very best boats for their work that this country can give them. My second object was to do what I could to ensure that the taxpayer should get full value for his money. The Admiralty may think that they got round an awkward corner by the form of inquiry they held and by the statement which was made in this House, but serving officers and personnel know the value of that statement. They have no illusions about it; and Admiralty personnel concerned also know that awkward questions have been avoided. Boat-builders know quite well that the Admiralty have let the British Power Boat

Company get away with it. For myself, if I may say this, I have endeavoured, for what it is worth, to try to support the Admiralty in their colossal task of rebuilding the Fleet, but I confess that the failure of the Admiralty to face up to this matter is a disillusionment to me and raises certain anxieties in my mind as to how far all is well in other matters of naval construction.

Sir Robert Tasker: May I ask the Minister when he replies to reassure the House on a point raised by a gallant Admiral who led us to suppose that the small gun was equal to the big gun? That was not a lesson which was learned when Admiral Craddock lost his squadron, and his gallant opponent on that occasion in turn lost his ships to Admiral Sturdee. I should like the Minister to reassure the House that it is an undoubted fact that the big gun must of necessity be a superior weapon to the small gun.

6.55 p.m.

The Parliamentary Secretary to the Admiralty (Mr. Shakespeare): If my hon. Friend the Member for Holborn (Sir R. Tasker) will allow me, I will deal with his point in the appropriate place, and if by any chance I should overlook it, perhaps he will remind me of it. We have had a very interesting Debate on this Report stage. It was opened in a speech of studied moderation by the right hon. Gentleman the Member for Hills-borough (Mr. A. V. Alexander). It shows that in times of tension the things that unite us are far more apparent and close to us than the things which divide us. I have no complaint whatever as to the reception of these Navy Estimates. Indeed, I think that hon. Members in all quarters of the House have been most gracious in their reception of the main purpose of the Estimates. I have a lot of questions to answer and I will reply to them as briefly as possible, but, frankly, one or two are of such a technical nature that I would rather not embark upon a reply, and for greater accuracy I shall probably confine myself to sending letters to the hon. Members in the course of the next few days.
First of all the right hon. Member for Hillsborough raised a question of foreign policy, but had not so much complaint against the Navy. I think he will agree


with me that however many enemies may come against this country, whether it be one, two or three, the vital thing is that this country should be fighting in a just cause, which will not be wanting in such an emergency. He raised the important question of the German Naval Treaty and here I should like to endorse what my hon. Friend the Member for Londonderry (Sir R. Ross) said. The Anglo-German Naval Treaty, the only one of its kind in the world, has been a stabilising factor in naval rearmament, and I think has been of mutual advantage to Germany and ourselves; and, moreover, I should like to say quite fairly, as one must, that it has been scrupulously kept, not only on our side, but on. the German side. In all fairness that must be said. My right hon. Friend asked what would be the position as regards the'' Royal Sovereigns '' in the event, of which I have no more knowledge than he has, of Germany denouncing that Treaty. Of course, if that should happen, we should be released from any obligations arising out of our notification of scrapping.
Quite a number of speakers, including the hon. and gallant Member for Pembroke (Major Lloyd George), the Senior Member for Oxford University (Mr. Alan Herbert) — who made an unaccustomed intrusion into our water, not that I resent it at all—raised the question of destroyers and smaller vessels. Of course the House will appreciate that the Admiralty never minds being pressed to build more ships, and I can only say that, as I did last year, I shall report to my noble Friend what the feeling on the subject is in many quarters of the House; but hon. Members will appreciate that the 20 new escort vessels which we are building are in numbers something more than two flotillas of destroyers, so that in point of fact we are making provision in these Estimates for the equivalent of four flotillas of destroyers. As to the rate of building and production, we are making considerable efforts in view of the fact that when these two flotillas are ordered we shall have over 43 destroyers on the stocks, quite apart from the 20 new escort vessels. The right hon. Gentleman also raised the question of small German submarines which might use Spanish ports. My colleague the Civil Lord dealt with that point, but I would point out that if the conditions obtaining in the next emergency are the same as they were in the last war it is

doubtful whether a submarine with such low endurance could ever get to Spain.
The hon. and gallant Member for Pembroke raised again the question of Pembroke Dockyard. I do not want to be forced into the position of turning down the consideration of any problem, and what I say is subject to that reservation, because we constantly survey and re-survey naval needs, and it may well be that in the near future and in the light of changing circumstances we shall re-survey the whole dockyard position—we are always doing it. But I can only give our views as they are at present. The position is, as the hon. and gallant Member knows, because I had the pleasure of inspecting that dockyard in his company, that the Royal Air Force have taken over for specific purposes nine-tenths of that dockyard, and have erected very substantial buildings.
My hon. and gallant Friend referred to the loss of Queenstown and Berehaven. If one talks about liabilities, one must always remember the assets and the dockyards which have come into being since the War. At least three new docks have come into existence at Falmouth. Critics seem to imagine that we should open Pembroke Dockyard in order that ships damaged by submarines might go there in time of war. In point of fact no such merchant ships in the last War went to Pembroke Dock for repair. There is a good deal of misconception about what Pembroke Dock was used for at all. Pembroke Dock was not a very good repair depot. In the main it was used for small ship construction. We never built anything more than a C-class cruiser. We have repairing facilities at Falmouth and in the existing dock at Milford Haven, which will take a cruiser of the Southampton class. This question is always interesting, but one must realise that we cannot consider it in relation to any emergency because I am advised that it will take two or three years before anything can be done. It has taken 10 years to get Singapore Dock into a state of readiness.

Mr. Jenkins: Is it not a fact that, of the 19 dry docks that exist at present in the ports that the hon. Gentleman has mentioned, only about three will be available for repairs for any decent sized ship, as they have not been modernised?

Mr. Shakespeare: The hon. Member probably knows South Wales better than I do, but, speaking from memory, I should have thought that at least seven of those docks would take a ship with a beam of more than 55 feet.
The right hon. Gentleman raised the question of the anti-aircraft defence of our dockyards. That is a matter for the War Office, but we are naturally in close touch with them. In so far as the question of defence of isolated naval stations is concerned, we propose to form units in civilian employment to man the defence weapons with which they will shortly be provided. He went on to deal with the question whether the Admiralty are getting value for money and are taking such steps as they can to prevent profiteering. He has had considerable experience of the procedure at the Admiralty and I am glad he paid us the compliment of saying that we did all we could. We have roughly two methods. First of all, we rely on competition where there is genuine competition, and we take the lowest tender. If there is not genuine competition in the case of some naval requirements—guns, gun mountings, much armament work, torpedoes, shells, fuses, and indeed a large number of other cases where either there is no competition or there is evidence of an association or a ring, we rely on one or other of two methods, or sometimes a combination of both. We have always had at the Admiralty the use of the technical costing accountants who were in the old Ministry of Munitions, and their help has been invaluable in assessing the exact cost of labour and material. In addition to the advice of these technical costing accountants, we have, of course, the advice of a number of skilled professional accountants in the Admiralty who spend their whole time in going into costings as regards overhead costs and, when we have a combination of examination by the technical costings accountants and the professional accountants, we have a pretty good idea of the cost of producing a particular requirement. Then the Director of Contracts, who has been at the Admiralty for 25 years, a very devoted civil servant of great experience, negotiates a price with a particular firm and I think he gets value for money. He takes into account the capital employed in the company and the turnover. Moreover the question of sub-contracts is given the same careful

attention by the Department. We always insist that the main contractor will, where possible, put out to open tender certain requirements, such as capstans, steering gear and so forth.
Moreover, we have something that is of vital importance in considering whether we get value for money. We have the check of the Royal Dockyards. I have here a comparison as regards ships built in a Royal Dockyard and by private contract. In one case the dockyard wins, and in the other private contract. In the case of the "Manchester," a 1935 programme cruiser, that cost at private contract £2,190,000. In the case of the "Gloucester," a cruiser of a similar type in the same programme built in a Royal Dockyard, it cost £2,230,000—slightly in excess of the contract price. On the other hand, in the case of the "Aurora" the dockyard came out slightly cheaper. It was in the 1934 programme and it came out at £1,341,000. In the case of the "Penelope," of the same class, in the 1933 programme, the contract price was £1,385,000. The House may be assured that every step is taken to set: that we get value for money. The right hon. and gallant Gentleman the Member for Newcastle-under-Lyme (Colonel Wedgwood) made a very interesting incursion into the Debate, but he covered so many questions raising matters of policy that, if I made him an adequate reply, I should have to give away the whole disposition of our Fleet and our strategy in time of war. I think my best course would be to have a private conversation with him.
The hon. and gallant Gentleman the Member for South Paddington (Vice-Admiral Taylor) raised the question of the big battleships. He wanted smaller battleships of 20,000 tons. I am only a lay strategist, but up the present the size of battleships has been governed by the various treaties of limitation. You have to get into one battleship, let us say of 35,000 tons up to recently, three main factors—speed, protection and armament. Clearly, if you have a20,000-ton battleship you cannot get anything like the gun power or the speed, or indeed the protection, that you can get in the larger ship, and when it comes to the cost of a capital ship of 20,000 tons and another of 35,000 tons, if you take a long period, not only the capital costs but the maintenance charges, there is not all that difference in it as regards costs. That answers the


point raised by my hon. Friend that, if you are going to build a smaller ship with smaller guns, you are not in a position to take on one of these monsters with 16-inch guns.

Sir M. Sueter: Can the hon. Gentleman give us any information about Japan building 40,000-ton ships?

Mr. Shakespeare: All I can say on that is that clearly it is always difficult to get information in respect of a country which does not give us information. We have no official information as to what Japan is doing, because she is outside the arena of the Naval Treaty, but my hon. and gallant Friend will note that the signatories to the Naval Agreement have recently decided to increase the dimensions of their capital ships up to 45,000 tons, although we have said that we shall not go beyond 40,000 for the moment.
The hon. and gallant Gentleman the Member, for Hertford (Sir M. Sueter) rather challenged my statement as regards the preparedness of our ships against air attack and our greater preparedness to deal with submarines, and he quoted the case of the "Deutschland." His information does not square with mine. I would rather take the word of the right hon. Gentleman the Member for Epping (Mr. Churchill), who said that in his view they never intended to hit the "Deutschland" but were aiming at the Island of Majorca and hit the "Deutschland" instead.

Sir M. Sueter: I cannot let that go unchallenged.

Mr. Shakespeare: Be that as it may, I do not think it affects my argument. I am sure that the "Deutschland" is not as heavily defended against anti-aircraft attack as our modern battleships, and I was talking about modern battleships. [Interruption.] She is not modern as compared with our modern batleships. I understood that the gun crews were sleeping at the time. They were all in light kit.

Sir M. Sueter: The German admiral stated that they fired on the aeroplane.

Sir R. Ross: Is it not a fact that the gun crews were not closed in and that she was hit by two bombs but the one that did the damage hit the mess deck while the other hit the top of the turret and did no harm?

Mr. Shakespeare: If the crew had been at their gun stations there would not have been the same casualties. We cannot, however, continue that argument. I read a carefully considered statement, which naturally had the approval of the naval staff, and I do not retract from what I have said. I thought it necessary to give as much assurance to the country as possible and throughout my speech I was careful to make understatements rather than over-statements. I might have added more than I did if it had not been against public policy.
When my hon. and gallant Friend says that I over-stated our preparedness against the submarine, I do not think he should quote at me an interpretation of my speech from the headlines in a newspaper. I never said we had got the mastery of the submarine. All I said— and here, I think, I made an under-state-ment—was that we are in a much better position to deal with the submarine menace in future owing to the great experience we had in the War. My second point was that since my hon. and gallant Friend's day, when he was a gallant commander of a submarine, we have greatly improved and perfected the method of detecting submarines. I said that these two things enabled us to deal much more successfully with the submarine menace than we were able to in the late war.
The hon. and gallant Member for Nuneaton (Lieut.-Commander Fletcher) fired at me with the persistence of a Vickers' gun a number of close-range bullets. I noted the suggestion he made as to the use of the Royal yacht in peace time, but I should think that there was no better use than that she should be available for the purposes for which she was built, namely, as a Royal yacht for Their Majesties. I think the head of a great Empire is entitled to have a yacht. He asked whether the officers appointed to the Royal yacht would be treated for promotion as though they were in the Navy arm. The answer is, yes. He asked me about Keyham College. The transfer has been approved in principle, but I am not in a position to say when a start will be made.
Rather surprisingly the hon. and gallant Member got back to his old favourite the question of the Scott Payne motor-boats. I had no notice that it was going to be raised and I cannot


charge my memory of all the details. It is a very long and complicated question. I was chairman of the committee which inquired into it. We had a full and exhaustive inquiry. We asked for evidence and for any witnesses to come forward with evidence. A naval officer does not want immunity to appear before such a committee. I was hoping that the hon. and gallant Gentleman himself would have provided us with evidence, but no evidence was forthcoming. Indeed, we had to search for evidence. The report of that committee gave chapter and verse in great detail and we found all the allegations made by the hon. and gallant Gentleman not to be true. I do not think he put them forward as gospel truth. If I remember rightly, he put them forward as charges that were current here, there and everywhere, and which should be answered. We did answer them. Not only that, but when I visited the Fleet in the Mediterranean shortly after he raised this point, I took particular care to examine the flotilla there in order to find out whether there was anything we had overlooked in the Admiralty inquiry and any point that might bear on this issue. I can only say that I found the officers in charge of that flotilla enthusiastic about the performance of these particular boats. The flotilla had just come 700 miles under their own steam at a good average speed, and they had no more trouble than was common to engines of that type. They had their teething troubles, but at a critical time when we very much wanted this particular boat there was only one type available, and that was the type we got. Some credit is due to the designer who was the pioneer in this matter.
I did not resent the hon. and gallant Gentleman raising these things because I thought then, and I think now, that he did a service; because, if these rumours were going about, it was far better that they should be put in the House where Ministers were given a chance of answering them. I think, however, that when a thing is settled it should be allowed to be settled. That inquiry was a year ago, and no questions have been put from those benches, and the right hon. Gentleman the Member for Hillsborough never referred to the matter again. Nor did the hon. and gallant Gentleman raise it again. We went into all those questions

about old engines being bored. We traced the number of every engine and where the engine was. We explained the circumstances in which particular engines had to be rebored. They referred exclusively to the original two or three engines which were sent to Portsmouth for experimental purposes. The water got into one of them and it had to be rebored. We absolutely satisfied ourselves that these charges were without any foundation whatever. Further than that one cannot go. That being so, one should not keep harping like a dog at its old bone.
I think I have answered the main questions put to me. I will read the OFFICIAL REPORT again, and if I have neglected any I will follow them up. Let me end on the note on which I started. The Civil Lord and I are very grateful for the co-operation we have had from all parts of the House and the tributes we have had, not to ourselves, but to the efficiency of the Navy. If the Civil Lord and I are at the Admiralty much longer we shall gain a reputation for efficiency, which I, at least, do not deserve, but I shall take great pleasure in passing to my colleague the First Lord, and the Sea Lords, to whom the real credit is due, the high opinion in which the Navy is held in the House of Commons. There is a general feeling in all parties that in a time of unparalleled rearmament we have done our best to make the Navy strong, for that is the first condition of this country's survival.

7.24 p.m.

Mr. Ammon: The Debates last week and to-day have been conducted in a manner that accords with the gravity of the world situation. The criticisms have not been of a party character but have been directed solely to the purpose of getting the utmost efficiency in the Navy in a time of great difficulty. There are one or two things that still want a little further attention and that I raise in no spirit of carping criticism, but simply because all of us feel that the world situation is so acute that no weaknesses can be allowed to show anywhere. When we discussed the Vote last week, I ventured to say that had we been wise in our day and generation and sought and found, as we could have done at any time, the co-operation and friendship of Russia, we might have been in a much stronger position than we are at the present time and things that have been


done in South-East Europe might never have happened. Judging by the pictures that have appeared in the week-end Press, we are evidently far along the road to get over that difficulty and in a much closer personal contact in a real sense with Russia than we were some time ago. It is indicative perhaps that we are beginning to get back to the collective system of security, although it seems that we shall have it to a much looser degree than we might have had it some time ago. I hope that, having made a start, we shall not lose an opportunity to make such agreements and get such understandings as we can as quickly as possible with these other nations, which would have been only too ready to join up with us earlier.
Many Members have again raised the question of the provision of better docking facilities at Pembroke. That is bound up with those questions which I raised last week, and which have been raised again this afternoon, about the whole system of providing a convoy system and places of refuge for our merchant vessels in time of trouble. It has to be remembered that in the last War—and this is an under-state-ment—we had no fewer than 300 destroyers, and, in addition, we were assisted by the United States and Japan. Even then our losses, as we were told by the hon. and gallant Member for Hertford (Sir M. Sueter), of merchant shipping amounted to 6,750,000 tons, and we were brought into great difficulties at one period. The situation at present, assuming we are again plunged into war, is worse than it was then. There are fewer merchant vessels than there were at any time in the War, and we cannot afford to lose so many. Also, we have not the possible assistance of the United States and Japan. Therefore, there is the need, which has been emphasised again and again to make up as quickly as possible a larger number of destroyers and small craft to act as convoys. My right hon. Friend raised the need for a smaller destroyer than those that are being laid down, and he was supported by no less an authority than the hon. and gallant Member for North Portsmouth (Sir R. Keyes). These are disturbing matters for those who are giving consideration to them because in the last War we were nearly brought to a condition of food shortage in this country with a much larger Mercantile Marine

than we have now and a larger strength of convoy than now seems to present itself. It seems that we ought to do a good deal more in supplying the smaller craft than appears to be necessary in the opinion of the Admiralty.
My right hon. Friend also raised the question, to which the Parliamentary Secretary has referred, of the need for something in the nature of a Committee of Supply. It is only fair to my right hon. Friend to say that it was not he who raised any question about the Power Boat Company in the Debate last year. The only reference made to it from the Front Bench was by myself, when I said that such charges could not be allowed to go unchallenged and must be sifted to see what accuracy there was in them. We have to face the fact that we are in a position somewhat analogous to a state of war, and therefore it may be worth while to consider whether or not we should set up a Committee of Supply to examine and check contracts. It does not do any good to have repeated charges of the possibilities of excessive profiteering.
There is a new factor in the position now, as the Fleet Air Arm is coming under the control of the Navy. We have had some pretty damaging criticism of contracts relating to the Air Ministry, and, as far as I know, contracts for the Fleet Air Arm will have to go through the Air Ministry. That seems to me another reason why there should be some further check on prices and profits. The Parliamentary Secretary gave us examples of checks and estimates made by the Royal Dockyards as against the private builder, and in one case he showed that the Royal Dockyard was about £40,000 cheaper. But it should be more than that. A private builder has not the same overheads as the Royal Dockyard, and to a large extent he spreads them over other shipbuilding.

Colonel Llewellin: We spread them over all the repair work in the dockyards throughout the whole year.

Mr. Ammon: Even so, it is still for the one employer. Although we welcome the check, and the fact that the Royal Dockyards can compete so successfully, that does not tell the whole story and may point to the necessity for further consideration being given to the matter.
Another point raised by my right hon. Friend, to which no answer has yet been given, was about the slow promotion from the lower deck to the officer class. It was no answer that was given last week to the hon. Member for Romford (Mr. Parker), who pointed out that of 368 persons who became officers, only 17 came from the lower deck. It has to be remembered that by virtue of their service they are bound to reach that promotion at a later age than others, and therefore their chance of further promotion is reduced. Now, when an attempt is being made to popularise the Navy, I hope that further avenues of promotion will be open for suitable men from the lower deck. Nobody has suggested that every man on the lower deck is capable of becoming an officer. All that we have said is that there is a great reservoir which has not yet been fully tapped.
The hon. Member for Londonderry (Sir R. Ross) made some criticism of my right hon. Friend's comment on the Anglo-German Naval Treaty. That Treaty was brought in to mask a breach of the Versailles Treaty. Its provisions relating to 35 per cent. of global tonnage meant that we must go on building at a much higher figure of post-War construction, and the 45-100 for submarines meant that of necessity we must build a larger number of destroyers. The hon. Member rather dismissed the pocket battleship as of not much importance. But it is armed with 11-inch guns, and there is nothing that can overtake it except our battle cruisers, so it cannot be dismissed so easily. This only strengthens the point made by a number of other speakers of the need for a larger number of small craft in order to give better protection to our ships.
The other question that I want to raise is the production of oil fuel from coal. This will become of increasing importance should we become engaged in a major war, and though it seems at first flush to be expensive, it may in the long run prove economical, and it is surely worth while to carry forward as fast and as far as we can all the necessary experiment and research. It is the more important because we have largely lost the strategic position which we had when coal was the principal fuel for the Navy. I do not join with those who say that our insular

position has been sacrificed. Even in these days we can be grateful for the fact that we are not on the Continent of Europe. In these days of the development of air power we gain something from our insular position. Allowing for the maximum of damage that could be done from the air, we still have to rely on the Navy to see that our supplies of food and war material reach these shores, and therefore it is still of first importance that the Navy should be maintained at its maximum efficiency. We on this side do not give way one iota in our opinion in that connection. We reserve our right to point out weaknesses and defects, but all for the one intention and purpose of seeing that the country is protected by its first arm to the maximum. To that end there will be no division on the Votes that come before the House to-night, because we feel that in times of emergency such as these the things on which we disagree are of much less importance than the things on which we agree.

7.40 p.m.

Mr. David Adams: The House will be grateful to the Parliamentary Secretary and the technicians who have spoken in the Debate, but there are some things which the Parliamentary Secretary slurred over in his reply to which attention should be given. There is no surplus of private dry docks available in the event of hostilities. The action of Shipbuilding Securities, Limited, was no doubt useful for preserving the profit motive with regard to shipbuilding in peace time—it sometimes surprises me that that concern did not carry its operations further insetting up a unified shipbuilding scheme for the whole country—but to-day that policy is a mistake. Recently on the Tees another shipyard which would be invaluable in the event of hostilities has been closed. What action are the Government taking in this matter? During the last War I had a good deal to do with merchant ships, and while it may be alleged that we got through our difficulties with relative ease, the fact is that there were great waste and loss through the detention of vessels unable to secure prompt repairs.
We are told that we have learned much about the value of the convoy system, and that the protection of our vessels will be superior to what it was in the last War. Certainly things then left much


to be desired. I have seen a vessel leave the Tyne at four o'clock, after receiving full advice and permission from the authorities, and within three hours the crew were back again, the vessel having being torpedoed and sunk while setting forth to join the convoy. The protective measures that prevailed during the last War for the defence of the Mercantile Marine will need to be multiplied several times. There is an additional menace to the Mercantile Marine in the bombing aeroplane, and while we may ridicule its offensive capacity on the high seas, it will certainly have to be reckoned with in the narrow waters and in the ports. The importance of the naval air arm will be equal to, if not greater than, that of any other side of naval activity. The bombing aeroplane of the enemy will be 'the greatest menace to be dealt with.
The question of oil from coal has been touched upon but has had no response from the Government Benches. I feel it very deeply that that question should still apparently be held at arm's length by the Government. We have learned from the commissions that have been sitting on the subject that the cost of the adoption of oil from fuel, while now in excess of oil which is imported, in time of war would certainly not be so. We saw how the price of petrol rose during the War to 4s. 6d. and 5s. a gallon. In addition to that was the cost of protecting the transport of oil in the tanker fleet which brought it to this country. From a careful study of the reports of the commissions, I have no doubt that oil produced from coal would be very much cheaper during a period of warfare than oil brought overseas.
The question of prices is always very entertaining to all sides of the House. The Minister has certainly shown that whatever system has been adopted has failed substantially to achieve its aim. No one denies that very large profits are being made at the present and that a check is not being placed on those productive agencies which will become very masterful during a period of war. As we have observed from the public Press, the United States Government, are indicating that they have under close consideration the question of deliberately restricting profits from armaments to 10 per cent. I am not satisfied that that might be a reasonable figure and might not be too low in

the case of a concern required to set up additional plant which would rapidly become obsolete at the end of hostilities. Therefore, protection would have to be accorded to them. Audited accounts should certainly be introduced and a better check made than merely that of rival contracts between the Admiralty and private yards.
I would like to refer to the question of dilution, a larger question as it has to be faced to-day than as it was faced in the last War. Are there regulations offering guarantees to the engineering industry in return for their assent to the abrogation of trade union rules, regulations, and conditions, and possibly, although I hope not, to the dilution of certain aspects of technical skill? Such a scheme was very successfully carried out during the War, upon specious pledges which were not honoured after the War. As an engineering person, I well remember the deep and abiding resentment which was felt in engineering circles at the failure of the Government to implement pledges which had been solemnly given to that industry. Have regulations been drawn up capable of giving the necessary protection and of restoring the industry to its pristine strength and power with regard to hours, wages, and conditions? If so, perhaps a satisfactory adjustment may be made. It is the duty of the Government not to delay this matter until hostilities are upon us, but to act forthwith in this direction.
The engineer is a technician who has paid very dearly for his experience and knowledge. I served nearly six years as a bound apprentice, receiving a very small remuneration for very long hours— 54 per week. As a working engineer, I should hesitate very greatly to submit to a request that I should abandon my technical skill and be prepared to introduce others who have not served their apprenticeship and who are relative strangers to the industry, with all the menace of the danger that might ensue to the industry, and leaders of Labour opinion in the engineering world would not for an instant entertain any suggestion of dilution leading to the abandonment of the structure which has been built up in the industry with such labour and toil. We are entitled to some response to the points which I have put, relating to oil from coal, dilution, and the admitted shortage


in the mercantile world of private yards and docks which would be imperatively required in the event of hostilities.

7.52 p.m.

Mr. A. Jenkins: I should not have taken part in this Debate had it not been for a statement made by the Parliamentary Secretary in regard to dry docks. I did not have the opportunity of hearing the whole of his speech but the statement to which I refer did not convey an accurate impression of the conditions which exist in some of those docks. He stated that there were 20 dry docks between Plymouth and Newport; there are, as a matter of fact, 19 dry docks and one pontoon. The impression given was that each of those dry docks was capable of carrying out substantial repairs, but the fact is that they are, in the main, in the condition in which they were in prewar days when they were as a rule dealing with small boats. That was the type of boat that was carrying coal, such as the small collier with a narrow beam as compared with the modern boat. The result is that a large number of those docks are now incapable of dealing with a modern vessel. Of the 19 dry docks in those ports at the present time only seven are capable of taking such a vessel and five of the seven are in tidal waters. Some are in the rivers where it is difficult to bring the bigger type of ship. Owners resent taking their boats into docks in tidal waters.
In fact, there are only two dry docks in the whole of the South Wales ports capable of taking a modern vessel. That is an entirely different impression from that which was given to the House by the Parliamentary Secretary. He will know perfectly well that his attention was called to this matter as far back as 15th November last year, when I asked him in the course of a statement which I made to the House for an inquiry so that the whole position could be examined. I pointed out in the course of that Debate that the most vulnerable ports in this country had undergone substantial modernisation of their docks in post-war years while there had been little or no modernisation in the ports on the Welsh side of the Bristol Channel. These, I believe, are considered some of the least vulnerable of our ports. Substantial

modernisation has been earned out in London in the post-war period and a substantial increase of shipping has come to London, but there has been a diminution of shipping in ports on the Bristol Channel. I made my demand for modernisation on that occasion in order to improve employment in the area of the docks concerned, and although things were difficult at that time they have become still more difficult.
One remembers the pressure there was upon those docks in the period 1914–18. If we had a similar situation to-day as existed then, with the bigger type of tramp steamer, it would mean that South Wales would be much less able to carry out repairs than in the period referred to. It is therefore of considerable importance that this matter should be dealt with. I do not know what the Admiralty have done about it, but local people are very much concerned and, through the local authorities, they have set up a committee to go into the matter. It may be that the Admiralty have made some inquiries, and, if so, I should like to have some of the particulars because this is a matter of vital importance which should be given careful consideration.
On 15th November I quoted a statement from the "Daily Telegraph" written by their shipping correspondent, who said:
The point is that unless adequate dry docking facilities are provided beforehand, the plans for diverting traffic from the cast to the west in time of war may prove impossible to carry out on the scale intended.
He went on to make a further statement with regard to the matter, calling attention to the seriousness of leaving those docks in their present condition. I do not know whether we shall get a statement from the Government, but I think that the Parliamentary Secretary unintentionally left the House with an entirely wrong impression as to the docking facilities in those parts. I hope that we may get a clearer explanation with regard to this matter.

7.59 p.m.

Colonel Llewellin: Perhaps the House will allow me to speak again in order to clear up one or two matters which have been raised during the Debate, and then we may be able to get our Votes without further discussion. I listened very attentively to the hon. Member who has just


spoken; certainly the information which he gave the House does not correspond with that which the Parliamentary Secretary gave this afternoon, or which I gave on Thursday of last week. If the hon. Member has some spare time and can come to the Admiralty and discuss the matter with me I should very much like to go into it with him. I think we could examine more conveniently in that way what is an issue of fact which might be quite simply cleared up.

Mr. Jenkins: Thank you.

Colonel Llewellin: On the subject of promotion from the lower deck, unfortunately my hon. Friend the Parliamentary Secretary forgot the promise which I made on his behalf the other night. I did not intend that the statement should not be made and I intend to give a reply now. The facts are that, if we get the right kind of young man from the lower deck, we are anxious to have him as an officer. In the last two years we have greatly improved the scheme under which these young men can undertake their training. In the old scheme, which obtained when the hon. Gentleman opposite was at the Admiralty, and when only four candidates qualified from the lower deck in one year, the men selected had to train for the examinations in their own time. Now we have taken, them into separate training battleships. East batch—there are two going through at the present moment—has a commander and a schoolmaster officer. They are treated as cadets, and they are given their whole time. One batch was in the boys' training ship, and these young ratings were learning by giving a certain amount of instruction to seamen boys. They have, therefore, ample facilities for qualifying for the examinations. Last year 17 passed out, and 42 are going through the course this year. We hope to be able to take more next year. Apart from that, as the hon. Gentleman will have realised, we have this year instituted the new scheme of promotion for young warrant officers, who will come in, not through the old mate scheme, but pari passu with the boys who have come from Dartmouth or from special entry schools. We have thus made a considerable advance, and certainly I am not in any way afraid of dealing with the matter.
The next point with which I should like to deal is with regard to oil from coal. Of course, if the Royal Navy could get

its supplies from this country, nobody would be more wiling to do so, because it is quite clear that we have to provide our tankers to bring oil from overseas, and, in the event of emergency, we shall have to convoy those tankers, at any rate when they get within dangerous waters. Therefore, we would willingly do it if we could. The position is that there are three known processes; the right hon. Gentleman the Member for Hillsborough (Mr. A. V. Alexander) did not suggest, and I know he would not suggest, that we should go back to coal burning ships; it is a question of getting oil from the coal and burning it as oil. There are three methods of doing that. One is by low temperature carbonisation. We tried some oil produced in that way a few years ago, and it was not satisfactory as regards the quantity we could get. Most of that oil now goes on to Billingham for hydrogenation into petrol. The hydrogenation process at Billingham produces the finer oils rather than oil fuel. It produces aviation spirit and motor spirit, and not really oil fuel. It is an expensive process for the production of cheaper oils, such as oil fuel. Nevertheless, we have tried some of the latter, and it did not, as oil fuel, come up to the Admiralty's requirements. The third process is the Fischer process, which is a German invention. It has not been tried in any extensive degree in this country, and patent rights would have to be obtained for any firm starting it here. We have, however, as I have said, tried oil from both the processes which are at present being worked in this country. We are willing to try oil from any other process, and, if it meets the requirements of the Navy, we are certainly willing to buy as much as we can from internal sources. With regard to our motor spirit, we do buy a considerable proportion from the Scottish shale industry, which makes it into benzene or something of that sort.

Mr. Jenkins: Did I gather that the hon. and gallant Gentleman said that from the low temperature carbonisation and hydrogenation processes so far no satisfactory motor spirit for Admiralty purposes has been obtained?

Colonel Llewellin: I am not talking about motor spirit; I am talking about the oil fuel for running the ships—the heavy oil. I should be the last person to say that they do not make good motor spirit. Indeed, they make aviation spirit.


But they do not produce the heavy oil which we need, and, when one is speaking about the oil requirements of the Royal Navy, that is the oil that we all have in mind. Those are the two main points to which I rose to reply, but I cannot refrain from saying one word about the remarks of the hon. and gallant Member for Nuneaton (Lieut.-Commander Fletcher), who is not here at the moment. He quoted Section 43 of the Army Act at me. I do not know whether he thought I should not have brought it with me, but I did, and I find that it does not quite bear out the interpretation that he put upon it. It is a personal grievance that the soldier can raise, as I said in the Debate the other day.

Mr. Ammon: Was not my hon. and gallant Friend's point that no one can raise a complaint unless he is directly and personally concerned? That is the trouble.

Colonel Llewellin: That, of course, is so in the Army as well. The only time when a junior officer can put a senior officer under arrest, according to the Army Act, is when that officer is engaged in a quarrel, fray, or disorder. At any rate, I think I was right in what I said during the Committee stage. The other point, raised by the hon. Member for Consett (Mr. David Adams), with regard to dilution, is one which, when we wish for it, I shall have to raise. Naturally, I shall raise it first in the Admiralty Industrial Council, over which I preside, and of course, if we ask for any such thing, the first people I shall take into consultation will be my trade union colleagues on that body. We will meet that difficulty when it arises. It does not arise at the moment, so I think we can leave the matter there.

Mr. David Adams: Will the hon. and gallant Gentleman deal with the point regarding the admitted shortage of private yards and of proper dry docks for mercantile purposes in the event of hostilities?

Colonel Llewellin: That was the point that I promised to go into with the hon. Member for Pontypool (Mr. Jenkins). We seem to have different facts with regard to it, and I understood the hon. Member to accept my invitation to come over and discuss it with me. As there are other matters to be considered, perhaps the House will now give us the Vote.

8.10 p.m.

Mr. R. J. Taylor: It is not my intention to delay the House for very long, but I would like to draw attention to that portion of the White Paper which deals with boom defence vessels—small vessels built in small yards along the coasts of the country. I need not remind the Government that we on this side have, in season and out of season, put forward a claim for the location of industry. We have been unsuccessful, though it is true that we have trading estates. These small vessels that have been built for the Admiralty in small yards around the coast have been a godsend from the point of view of employment. I notice that the White Paper mentions that the last one or two of these vessels that are being built in my own town of Blyth are expected to be completed between May and October. I understand that more vessels of this class are to be built in the coming year, and I should be very grateful if the Minister, at some time convenient to him, not necessarily to-night, could give us some assurance, or let me know when we are likely to have some more of this work in the future. It has met a need in many of these small places, which have suffered owing to the decline of shipbuilding for the Mercantile Marine, to which reference has been made to-night.
These yards played an invaluable part during the last War. In Blyth, I understand, they built the first aircraft carrier for this country, so that it is not a question of efficiency. It has been largely due, as I have said, to the decline in shipbuilding for the Mercantile Marine, which is one of the consequences of having so many of our merchant ships built in Germany, Holland and other continental countries. The yard was rapidly falling into disuse; the fine machinery it contained, which was used extensively during the War, was rusting and rapidly deteriorating. Before the first of these vessels was built, no launch had taken place there for many years. Since then the unemployment figures have fallen, not altogether, but largely, on account of this building, from 25 per cent. to 16 or 17 per cent.
We look to the future with some perturbation, in view of the statement that some time between May and October will see the completion of the vessels now on order. I believe that the last of these vessels is now on the stocks. Apparently


the Government cannot see their way clear to determine where industry shall have its factories in this country, but at least the Admiralty can say where these vessels shall be built. I have pointed out the great benefit they have been in reducing unemployment and providing our people with work and wages, and what is probably just as important, keeping our men in active employment—highly skilled men who have served years of apprenticeship. Before we got these vessels, places on the South Coast, in the Isle of Wight and so on, were taking our skilled men. Very soon yards like these that were invaluable during the last War would have gone out of use, and the skilled men who were unable to get employment in some of these other yards would have had to go to some less skilled occupation, and the country would have lost the benefit of the skill, and I may say the sacrifice, resulting from the time that these men served at their apprenticeship. Threfore, I trust that when the contracts are given for the new vessels, if there are none of this class we may get some of the other classes that we are quite capable of building. I hope the Minister will, in due season, let me know that we have been favourably considered in connection with these contracts.

8.16 p.m.

Mr. Garro Jones: I would like to support what has been said by my hon. Friend, and to ask the Parliamentary Secretary to be good enough also to consider the claims of my constituency, which I am sure, like those of my hon. Friend's constituency, are worthy of such consideration. I hope that the silent compliment which is being paid to the Navy by the absence of so many hon. Members from the Debate to-night will not be unnoticed by the Admiralty. It may seem to those who do not understand the feelings of this House rather strange, when so much depends on this mighty force, that so few hon. Members should be here for this Debate, but I think the explanation is simple.
I rise not to bring forward any grave matters of policy, but because I am concerned about the question of the invaliding-out of men from the Navy. The matter came to my notice owing to a complaint concerning the case of a man named Young, who was invalided out after a course of severe training for the Royal Tournament. The hon. Member

may remember a lengthy correspondence that I had with him about it. The man was invalided out on account of disabilities which came to him as a result of his service in that capacity. That claim was rejected by the hon. Gentleman in terms which I do not say were discourteous, but which were certainly inadequate as an answer to a complaint by a Member of this House in regard to a constituent. It was an extremely unsatisfactory reply, and I had to follow it up with a series of further interrogatories for further and better particulars, of a nature that one does not expect to have to make after informing a Minister of such a complaint. This caused me to investigate the matter further. I put certain questions to the Admiralty and the various Departments, and I ascertained certain illuminating facts. I am going to give comparative figures which indicate a state of affairs that requires the urgent attention of the Admiralty, especially at a time like this.
In the two years 1937 and 1938 there were 597 men invalided out of the Royal Air Force, and disability was attributed to service in 88 cases—that is, 'only 15 per cent. In the case of the Navy, in the same two years, 2,499 men were invalided out, and the number of cases in which disability was attributed to service was 160 in each year, the proportion for the two years combined being 12½ per cent. When we come to the Army, in which, presumably, very similar considerations apply, we find that in the same two years 2,734 were invalided out, and 1,819 of these were awarded pensions and gratuities on account of the fact that the disabilities were attributed to service —that is, 66 per cent. In the Army the percentage was 66 per cent. in the Air Force 15 per cent., and in the Navy only 12½ per cent. Surely that is a prima facie case for consideration. I was not at all struck by the answer the hon. Gentleman gave to me as to the sympathy shown by the Admiralty in considering appeals when I read that in 1937 and in 1938 precisely the same number of cases were awarded grants on account of their injuries being attributed' to service in each year. The suspicion was naturally aroused that the Admiralty had set a limit, and that after 160 grants had been made in a year no more were to be allowed. On going further into the matter, I found that there had been a considerable Press campaign and long


criticism of the Admiralty for failing to attribute to service cases of injury or disease which undoubtedly were attributable to service. I want an assurance that the hon. Member will give his personal and detailed consideration to this matter. If he will give me that assurance, I shall not press any further points on his notice to-night. Could I have that assurance from the Minister?

Mr. Deputy-Speaker (Sir Dennis Herbert): The Parliamentary Secretary has already spoken in the Debate.

Mr. Shakespeare: I am not entitled to speak again. I have spoken once. [An HON. MEMBER: "You may speak with the leave of the House."] I cannot speak except with the leave of the House. If I have that leave, I will certainly look into this matter again. Of course, there is no limit to the number of awards, but I will look into the matter to see the reason for this disparity.

Ordered, That the Resolutions which upon the 14th day of March were reported from the Committee of Supply, and which were then agreed to by the House, be now read:—
That a number of land Forces, not exceeding 185,700, all ranks, be maintained for the Service of the United Kingdom at Home and abroad, exclusive of India and Burma, during the year ending on the 31st day of March, 1940.
 That a number of Air Forces, not exceeding 118,000, all ranks, be maintained for the Service of the United Kingdom at Home and abroad, excluding those on the Indian Establishment, during the year ending on the 31st day of March, 1940.

Ordered, That leave be given to bring in a Bill to provide, during twelve months, for the discipline and regulation of the Army and the Air Force; and that Mr. Hore-Belisha, Sir Kingsley Wood, Mr. Shakespeare, Sir Victor Warrender and Captain Balfour do prepare and bring it in.

ARMY AND AIR FORCE (ANNUAL) BILL,

"to provide during twelve months, for the discipline and regulation of the Army and the Air Force," presented accordingly, and read the First time; to be read a Second time to-morrow, and to be printed. [Bill 92.]

REPORT [23RD FEBRUARY].

Postponed Resolutions further considered.

CIVIL ESTIMATES, SUPPLEMENTARY ESTIMATE, 1938.

CLASS II.

1. "That a Supplementary sum, not exceeding £14,400, be granted to His Majesty, to defray the charge which will come in course of payment during the year ending on the 31st day of March, 1939, for the salaries and expenses of the Department of His Majesty's Secretary of State for the Colonies."

"That a Supplementary sum, not exceeding £3,044,710, be granted to His Majesty, to defray the charge which will come in course of payment during the year ending on the 31st day of March, 1939, for sundry Colonial and Middle Eastern Services under His Majesty's Secretary of State for the Colonies, including certain non-effective services and grants-in-aid."

Motion made, and Question proposed, "That this House doth agree with the Committee in the said Resolution."

8.28 p.m.

Mr. T. Williams: I do not desire to provoke a Debate on this Supplementary Estimate, but I should like to ask the right hon. Gentleman a question. In view of the highly complicated situation in the international field, and particularly in Eastern Europe, would it not be in the best interests of all parties concerned, and especially of the Government, if the Government were to defer the question of Palestine until the atmosphere in the international field is much clearer and easier than it is at the moment? Perhaps the right hon. Gentleman will express an opinion upon that matter.

8.29 p.m.

Mr. Mander: I have no desire to raise the wider questions involved by the Palestine Conference, but there are one or two questions that I should like to put to the right hon. Gentleman. The conference has come to an end, and I should like to know how far that sum of money has actually been expended. It may be that the conference has gone on rather longer than was expected. I understand that the Jews have paid their own expenses, and that the whole sum has actually been spent upon the Arabs. I should like to know whether that is the case, as that will to some extent affect the amount of money that must be available. One cannot help feeling that the situation in Palestine is very largely due


to the same causes which are creating trouble in the whole world at the present time. I am sure the Secretary of State —whether he feels inclined to say anything or not I do not know—knows as to the amount of money that has been spent and the interference there has been in Palestine by Germany and Italy with the deliberate object of making things as difficult as they can for the Government of this country carrying out a most difficult task there. The question which has been asked by the hon. Member is a very interesting one and certainly requires careful consideration at the present time. In the ordinary way the Government were to make an announcement in the course of a. few days as to their policy. There have been suggestions, for which I cannot think there is any foundation, that there may be something which will be regarded as in some sense a repudiation of the National Home for the Jews. If that were so, it would only be regarded as a surrender to violence and would have a disastrous effect upon our friends all over the world, particularly at a moment like this when we want all the friends we can find. I hope the Secretary of State will bear that point in mind, and perhaps it may influence him in saying that he does not consider this to be a particularty appropriate moment for opening a controversy, which, I am afraid, in any case will arise when the declaration of the Government comes to be made.

8.32 p.m.

The Secretary of State for the Colonies (Mr. Malcolm MacDonald): I have been:asked two or three questions and I will reply to them straight away. The hon. Member for East Wolverhampton (Mr. Mander) suggested that the total expenses of this conference had been on account of the Arab delegates in view of the fact that the Jewish representatives had met the expense of their own hospitality in London. It is true that the Jewish representatives chose to do that and that none of this money has been spent on their hospitality or entertainment in London outside St. James' Palace. A good deal of expense has been incurred in St. James' Palace on account of typing, messenger staff, extra telephone provisions, and so on in connection with the Jewish discussions, just as these extra expenses were involved on account of the Arab discussions. Therefore, it would not

be true to say that the whole of the sum which has been spent has been spent on account of the conferences with the Arab delegation. With regard to the question whether seeing that these discussions continued rather longer than we hoped, the expenses are being kept within the Estimate, we have not yet got the final figures, but I understand that they will show that despite the greater length to which the conferences ran, we shall be comfortably and reasonably within the Estimate of £14,400. With regard to the point made by the hon. Member for Don Valley (Mr. T. Williams), I would only say now, that we have that matter in mind and are giving it very careful consideration.

SUPPLY [7TH MARCH].

Resolutions reported:

CIVIL ESTIMATES, SUPPLEMENTARY ESTIMATE, 1938.

CLASS II.

DIPLOMATIC AND CONSULAR SERVICES.

1. "That a Supplementary sum, not exceeding £259,087, be granted to His Majesty, to defray the charge which will come in course of payment during the year ending on the 31st day of March, 1939, for the expenses in connection with His Majesty's Embassies, Missions and Consular Establishments Abroad, and other expenditure chargeable to the Consular Vote; certain special grants and payments, including grants-in-aid; and sundry services arising out of the War."

FOREIGN OFFICE.

2. "That a Supplementary sum, not exceeding £40,000, be granted to His Majesty, to defray the charge which will come in course of payment during the year ending on the 31st day of March, 1939, for the salaries and expenses of the Department of His Majesty's Secretary of State for Foreign Affairs."

Motion made, and Question proposed, "That this House doth agree with the Committee in the said Resolution."

8.35 p.m.

Mr. Wedgwood Benn: I should like to take the opportunity on this Vote to raise a matter on which I have asked questions of the right hon. Gentleman on several occasions. I refer to two ships belonging to Messrs. Billmeir, the" "Stangrove"


and the Stangate. They are small ships without wireless. I will deal with the "Stangate" first. I understand the position was that the "Stangate" went to Valencia and was there caught by a Franco ship outside the three mile limit, and taken in convoy by the Franco ship to Palma. The Foreign Office was informed that this ship was on the high seas under the control of the Franco ship, but no action was taken, and the ship is in Palma to-day. That is a serious thing. I know the view taken by His Majesty's Government with regard to British ships entering Spanish ports, but it is a serious thing for any ship to claim the right to proceed on the high seas in charge of a British ship which has been captured in this way.
As regards the "Stangrove," the case is somewhat different, and I would ask the right hon. Gentleman if he would be so kind as to correct me at once if I make an error in my facts, because I have no opportunity of reply and I am very anxious that the facts should be clearly stated and established. Therefore, if he does not contradict or challenge what I say, I must assume that my facts are accurate. This ship, the "Stangrove," was captured by the Franco warship "Dato" when she was out of territorial waters on the Spanish coast. On the 5th February she was taken by a Franco ship when she was five or six miles from the coast. I should be glad if the right hon. Gentleman would indicate whether he admits that this ship was taken when she was more than three miles from the Spanish coast, in fact five or six miles from the coast. I do not know whether he can do that now, but if so, I should like him to do so, because it would be very awkward if afterwards he says that that is a matter of challenge. I might say that his answers to me on this matter have not been satisfactory. We have the testimony of the captain of the ship, Captain Richards, and the first engineer and the first mate. I have seen the engineer and the first mate, and I have asked them questions. All the three men concurred in stating that the ship was five or six miles from the coast. The right hon. Gentleman stated that the captain had said that the ship was five miles from the coast but that this was denied by the captain of the Franco ship. Does he

accept the view of the three British officers or the view put forward by the captain of the Franco ship? I should be glad to have an answer.

The Under-Secretary of State for Foreign Affairs (Mr. Butler): I adhere to the statement given in my original reply, that the master of the "Stangrove" maintained that his position at the time of the seizure was on the high seas, while on the other side it was claimed that the ship was in Spanish territorial waters, In either case, His Majesty's Government cannot but regard the seizure as illegal. That is the position that His Majesty's Government hold.

Mr. Benn: That is it. That is entirely in keeping with the way the Government have treated the case from the beginning. They have taken the word of some Spanish captain on a Franco ship rather than the word of three British officers.

Mr. Butler: That is a most unfair statement. I have said that we accept the word of the master of the "Stangrove" that he was outside territorial waters, and I have said that we regard the capture as illegal. Surely, that is as far as I can go.

Mr. Benn: I offer the right hon. Gentleman my apology. I misunderstood what he said, and I thank him for his assurance. This ship was, then, outside territorial waters. Therefore, it is absolutely clear that the capture was piracy. What happened then? She was taken to Barcelona with her master, her officers and crew. When she arrived at Barcelona the captain and officers were not allowed to have any communication with their homes or with the owners of the vessel. The two officers of whom I have spoken, together with four or five seamen, were taken as hostages on a Franco armed merchantman, called the "Mar Negro," and from the 5th to 12th February they were taken around the Mediterranean as hostages, presumably for the good behaviour of the men who were left on the "Stangrove." On 12th February they arrived at Palma, where they found their sister ship, the "Stangate." At Palma the authorities came on board the "Stangrove" and took away one of the men, a Spaniard. What has happened to him we do not know, but the men of the "Stangrove" believe that he was taken ashore and shot. I would ask the right


hon. Gentleman whether he has made any inquiries about the fate of this man, and also whether he admits the right of any authority, whether they are insurgent or otherwise, to come aboard British territory, in the form of a British ship, and take away a man as a prisoner.
What happened to the two officers and the four seamen on the armed merchantman? They tell me that their food was very poor. For four days they were not allowed on deck at all but had to stay below. At first they had six cups and six plates and afterwards three cups and three plates, and they had to share them out as best they could. After three days they were allowed to come up and take the air. For the whole 12 days they were held as hostages in that Spanish ship. In the meantime, the "Stangrove" had reached Palma, having been taken direct from Barcelona. She arrived on 7th February, and was visited at once by the British Consul, and again on the next day, the 8th. On one of those occasions the Consul took possession of the papers and records of the ship. The master asked him if he would communicate with the owners of the ship and with Mrs. Richards, the wife and now the widow of the captain, but I am informed that the Consul said that he could not do so, as he had no power save to communicate the facts to the Foreign Office. So far as I know no communication was sent to Mrs. Richards of the fate of her husband until some 10 days or a fortnight later.
This Consul after his two visits made no further visit to the ship, as far as I know, before she was lost. From the 8th to the 23rd, on which date she was wrecked, he did not, as far as I know, pay any further visit. He left it to somebody else to see that these men, who were kept under armed guard in this Spanish ship, were properly fed. Had it not been for the naval officers from His Majesty's Ship "Hotspur" and other British vessels in the neighbourhood, the fresh meat required for the health of these prisoners would not have been provided. What is the name of this Consul who left British seamen captive in a foreign ship and refused to communicate messages to their families? Let us have his name so that we may know it. If the facts I have stated are accurate, and I believe them to be so, because I have taken every step to ensure their accuracy, and have cross-

examined the parties concerned, it is a shameful thing that British seamen should be left on board a ship of that character without any means of communicating with their relatives or with the owners. I am not particularly interested in the owners, but I am interested in the status of British ships and in the fate of British seamen.
On the 23rd a storm rose. About half-past five, so the engineer told me, a Spanish officer told Captain Richards to raise steam. At 7 o'clock he tried to raise steam because a written order had come, but before 9 o'clock the ship was on the rocks. The men were rescued by the breeches buoy, in which British naval officers played some part. The old captain refused to leave his ship. It was said by a court of inquiry that the captain hazarded his ship in not having steam up when bad weather was approaching. I think that is a most shameful thing to say. This old captain had been in harbour from the 7th to the 23rd. It was only a small ship, and he had kept steam up till the 18th, according to the statement I have had; and on the 18th he drew his fires because he had only 28 tons of coal left, and there was no other coal available—Franco saw to that. Two hours before, the particular wind which I understand makes Palma Harbour very difficult, arose. He found that one anchor was going so he put down another, but it was fruitless for the ship was blown on to the rocks and is now a wreck.
The captain was a man of singular character. He was 68 years of age. When he was first bombed he ordered his officers and men to leave the ship and he remained on board in charge in order that he alonéshould run the risk. When the bombing was over the other men, who were acting under orders, returned to the ship and were then captured. When the ship dragged in Palma Harbour he ordered his men and officers to leave and he remained on board. He said to Mr. Evans, the first mate, "No, I shall stand by my ship." The next day when they went aboard they found this old gentleman battered and floating in the water in the saloon. No naval chaplain came to his funeral; he was buried by the good will of a Roman Catholic priest. If these facts are correct there is something for the Government to answer. I contend that the Spaniards, who kept this man a prisoner and put him in a position which led in the end to his death, are guilty of a


crime. I also say that the authorities in Palma, who knew that this captain and the two officers and other British seamen were prisoners in a British ship in the harbour and did not see that they were liberated, declined, as I believe, to make any communications with their families, were guilty of a grave dereliction of duty. I also say that the Government which allows such things to occur should meet with the disapproval of this House.
I do not propose to divide the House. I am raising this matter first to clear it up, and if I am wrong I shall be glad to be told. I am raising it for the honour and reputation of this old man, whom I have never seen—Captain Richards. I am raising it also to draw attention to the fact that if the Government wishes Britain to be respected in the world she must not allow her ships to be treated in this way. To-day everything turns on prestige. What did Dr. Goebbels say before the Prime Minister made his speech? He said, "Not a word from the Democratic Powers." That was before the Prime Minister's speech. If you are going to allow British ships to be treated like this, illegally arrested, as the right hon. Gentleman himself admits, if you are going to allow British seamen to be made prisoners, hostages, and not allow the "Hotspur" to tell this wretched little armed merchantman to let them go, you cannot expect to maintain the prestige of Great Britain in the world. Finally, I say that it is men like Captain Richards who have built up the reputation of our merchant navy, and it is unwise to treat them in this way because you may never know when you may need their services again.

8.51 p.m.

Wing-Commander James: I came into the House without the slightest intention of intervening in the Debate, but really I cannot allow some of the things which the right hon. Gentleman has said to pass without comment. He says that he is interested in the status of British shipping. So are we all; and we can all combine to deplore the tragedy which overtook Captain Richards in Palma Harbour. But he also said that we should not endure insults like those which we have endured in this unfortunate affair. Without going into the merits of this particular case, which I am not arguing at all, I consider that the whole question

of these British ships does want ventilating. It is not as if it was a genuine trading concern being molested on the high seas. This line of shipping belongs to a gentleman, who himself, running no risks but sitting in London and making a large profit out of the Spanish war, exposes British ships, British seamen, and the British flag to insult and outrage.

Mr. J. J. Davidson: Is the hon. and gallant Member aware that his last statement has been made before and that the shipowners engaged in this trade made direct representations to the Prime Minister and placed before him definite proof and evidence that there was no undue profit-making in this shipping line; and that the Prime Minister admitted the facts by keeping silent?

Mr. R. J. Taylor: Is it not a fact that the owner of the ship is a British subject? Why single him out?

Wing-Commander James: I dare say that these so-called British traders have made protests, but consider the facts in regard to these ships. On 28th February last I put a question on the status of these ships, and the answer was that up to that date 99 vessels flying the British flag had been more or less seriously damaged in Spanish waters, that of these 99 vessels only 27 belonged to the same British owners before the outbreak of the Civil War, and that 20 had come on to the British register and under the Flag, after the outbreak of the Civil War. We know that it is desirable that shipping should come under our flag, but when this is used, as in the present case, as a mere cloak for blockade running under the protection of the British flag— for there is a blockade, whether one likes it or not—I think it is deplorable that it should be allowed to go on, as It has done, being a source of friction between ourselves and the Spanish Government. After all, in the last War, we blockaded Germany, and rightly so. There is a war on in Spain, and if the unfortunate seamen are sent there by profiteering owners, who in many cases are no more than nominees of the late Republican Government, and thereby embitter our relations with the Spanish Government, I think it is deplorable.

8.56 p.m.

Mr. Davidson: I should not have intervened in this Debate had it not been for the entirely unprecedented and un-British


nature of the methods employed by the hon. and gallant Member for Welling-borough (Wing-Commander James) in dealing with this question. Is the hon. and gallant Member aware that British shipping has always maintained its rights, in the face of the greatest opposition of foreign countries, in carrying out its legitimate trade?

Wing-Commander James: Legitimate?

Mr. Davidson: Is the hon. and gallant Member further aware that his own Government, Prime Minister, and Undersecretary of State for Foreign Affairs have agreed that those British ships were engaged in legitimate trade? Therefore, is it the hon. and gallant Gentleman's contention that whenever a dispute arises in some foreign country, British shipping firms, registered by the British Government and under the control of the President of the Board of Trade, should say, "There is danger now in those waters; we may be attacked by a foreign Power." Is it the hon. and gallant Gentleman's contention that those British captains and sailors should say, "We have something to be afraid of, we may be bombarded, and we cannot depend upon the great British Navy to defend us; so we will give up this trade and allow Britain to lose one of her most valuable trade routes"?

Wing-Commander James: My contention is that an entirely new situation has arisen in this civil war. I recognise that in the existing state of the law the British Government cannot act differently. But when the war is over, it will be necessary, in case such a situation should arise again, to have some means of discriminating between legitimate and regular traders and people who come under the British flag solely for the purpose of getting our protection.

Mr. Davidson: If the hon. and gallant Gentleman desires at some future date to alter international law, all the powers and regulations and Standing Orders of the House are at his disposal—at least, if he can bring about a conversion of opinion, particularly among the Members of his own Front Bench. But we are at present dealing with international law as it exists. Those shipping firms were acting strictly in accordance with international law—as was admitted by the Government—in carrying out legitimate trading. They were doing so subject to the power of the Non-intervention Committee and subject

to its rights to place officers on board and to inspect the cargoes. They were not carrying munitions to the Spanish people, but carrying out the merciful task of taking to them foodstuffs, ambulance requirements, and coal. I visited one of those British ships. I attended the funeral of seven British sailors at Tarragona— seven of the hon. and gallant Gentleman's countrymen—who were bombed by Spanish aeroplanes because of the lack of protection by the British Navy while they were undertaking their regular trade in accordance with international law. I was assured by the Under-Secretary of State— I have no doubt that, as an ex-British officer and a British gentleman, he is very proud of the fact that he so assured me —in answer to a question, that all the British sailors who were killed in Spain would be buried properly with the Union Jack around them.
In the case with which we are dealing now, the hon. and gallant Gentleman cannot ride off by saying that at some future time the legitimacy of this shipping trade will have to be considered because there is a civil war going on in that country. The British Mercantile Marine is, always has been, and I hope always will be, the backbone of the British Navy. The men of the British Mercantile Marine set an example to Britain in gaining and capturing trade routes and keeping them. With regard to this very deplorable episode—the death of this captain—I say that the Government have no right to adopt an attitude of nonchalance and inactivity in face of the facts that were stated by my right hon. Friend the Member for Gorton (Mr. Benn). Considering that this British captain was carrying on his legitimate trade, doing his duty and bringing succour to people who were oppressed, we have a right to have a complete explanation from the Government as to what they intend to do with Governments which treat British officers and sailors in this manner.

9.2 p.m.

Mr. Mander: The hon. and gallant Member for Wellingborough (Wing-Commander James) used a phrase which I find it a little difficult to understand. He seemed very much to resent it that these British ships going to Spain were engaged in making profits. He seemed to be very annoyed with these profiteering ships. Do I understand that if they had been


socialised ships, belonging to a State service and not working for profit, it would have been more agreeable to him? Otherwise, his words have no meaning. I think the matter with which we are now dealing was very much brought to the minds of hon. Members just before Christmas when they saw in the Palace of Westminster, a film entitled "Britain Expects," showing the actual events which had taken place during the bombing of these ships. One particular part, which on political grounds the film censor cut out—for there is a political censorship —showed a picture of the Prime Minister and stated, "Mr. Chamberlain is the first Prime Minister to refuse to allow the British Navy to protect British ships." That was cut out by the political censorship. There is one question which I put on the Committee stage of these Supplementary Estimates, and at that time the right hon. Gentleman the Undersecretary of State was not in a position to answer it. I repeat the question now. "Can the right hon. Gentleman say when the expenses of the Non-intervention Committee are coming to an end? Obviously, there is no point in existing circumstances, in going on with it, and consideration must have been given by the Government, and by other Governments, to the question of closing down the whole scandalous affair. There is no excuse for continuing it. Perhaps the right hon. Gentleman will be able to give a specific answer to that question.

9.4 p.m.

Lieut.-Commander Fletcher: I wish to raise a matter connected with the grant to Reuters, but before doing so, I should like to refer briefly to the item concerning passport officers. I feel that the information we have had in the House has shown that these passport officers must at present be working very long hours in circumstances of exceptional difficulty. I believe they deserve well of their country, for there must be very many wretched people to-day who believe that this country does stand for decency and humanity because of the courtesy and consideration -which overworked passport control officers show them in their trying time of distress and anxiety. I am not quite sure what are the conditions of engagement, employment, and discharge of these passport

control officers. I am not sure whether they are on any establishment list, although, personally, I very much dislike the idea of any civil servants doing long and arduous work and apparently not being on any establishment list. If it is felt that these officers are acting particularly well and that they deserve well of the country, then I think one tribute which might be paid to their work would be to review the conditions of their employment in order to see whether any alteration in them deserves consideration.
I am very glad to see the hon. Member for Sunderland (Mr. Storey) in his place, because I did not know that this Vote was to be taken and was unable to give him noticed that I proposed to refer to a matter in which he is interested. I looked round the House for him but could not find him. I wish to say at the outset that I am making no attack upon the business principles and intergrity of Reuters. When this matter was raised on the Committee stage I believe something was said about partiality on the part of Reuters in the presentation of foreign news. May I say that I myself have no evidence whatsoever upon that score and I do not on that account associate myself with anything that was said of that nature. To me, the important matter is.the adequate supply of impartial news to the Empire and to the world and how far this subsidy has helped to that end. I think it is a question of value for money. It is freely said that, thanks to the giving of such subsidies as this, Reuters enjoys a privileged position and special treatment which render it difficult for other British news agencies to compete and that the state of affairs of which this subsidy is an illustration hinders the improvement of news services to Empire papers.
I should like to ask specifically for a reassurance on a point which has been raised in connection with this subsidy in South African, Indian and Australian papers. When entering into this arrangement, did the Government obtain from Reuters a guarantee that they would not cut down their normal wordage by cable and substitute for it the messages from Rugby sent, partly at the expense of the British taxpayer? There is another point. Did the messages in respect of which we are asked to sanction this grant of £6,000, contain any criticism of Government foreign policy at the time of the crisis or were they confined to speeches and


comments favourable to the Government? I also wish to ask whether any Australian papers declined to take the Reuters services paid for by this subsidy. In fact, did any Dominion paper publish these services, and, if so, how much of them? The payment of subsidies to Reuters gives them a privileged, monopoly position which is resented and which apparently does not ensure adequate news reports. If I may take the instance of a recent Debate in this House on the dissemination of news, I understand that the "Singapore Free Press" was not entirely satisfied with the adequacy of the Reuter report. I have the Reuter report of that Debate here and it states:
Mr. Dower declared that Britain started with a very great advantage in the possession of the only universal news agency in the world with direct contacts with all the principal agencies the world over. For three-quarters of a century the independence, integrity and accuracy of the Reuter services assured its ready acceptance and thereby British prestige was maintained and a better knowledge and understanding of British aims was fostered.
The Reuter report then quoted from my own speech and simply said that I said "that at present it was impossible to broadcast too much straight news. There must be a certain preference for cable services as opposed to wireless services and that it was no use replying to subsidised propaganda with more subsidised propaganda." The "Singapore Free Press" telegraphed home to point out that "the only news they had received from London consisted of flattering references in the Debate to the usual channels of news to the Straits Settlements and that very little reference was made to the speech of Lieutenant-Commander Fletcher in which he referred particularly to the discontent here with the present news services from London."
The "Singapore Free Press" gave exceptional prominence to the amplification which was received in response to that telegram and they spoke of "the artificial news famine" in Singapore and stated that I had read extracts from the "Straits Times" which referred to Reuter's monopoly in Malaya. It went on:
The Reuter report of the Debate as cabled did not refer to these comments. The 'Free Press' secured the following report from the British United Press in response to a cabled request.
It then gave an instance of how these Christians love one another:

The Reuter version of this part of the Debate consisted mainly of flattering references to the Reuter services, with a casual mention of the B.B.C. The B.B.C. news bulletin consisted mainly of flattering references to the B.B.C. with no references to Renter.
At any rate it is clear that the Reuter account of the Debate did not contain any reference to criticisms of Reuter and that fact ought to be considered in the light of another passage from the "Singapore Free Press" which states:
Reuter is the only full cable or wireless service at present available to Malayan newspapers.
The "only service" but it does not give the news. The "Straits Times" has commented on that and says:
So ar as this country is concerned it is only the protection of the Reuter monopoly which has prevented Malaya receiving a far more extensive service of British news than it receives at present. for nearly five years now the 'Straits Times' has been striving to get into the country a second British news service, not with the idea of excluding Reuter but in the hope of stimulating that agency to greater effort by the introduction of competition. The service which we have sought to bring here is thoroughly reliable, absolutely independent and of world-wide repute, but, the most astonishingly numerous and formidable obstacles have been encountered. The remedy for shortage of British news is not a grant of concessions to Reuter which would strengthen still further the position of that organisation as a monopoly in certain parts of the Empire but by facilitating the transmission of all British news and shaking off that false impression that Reuter is the only reliable British news agency.
The same point of view is reflected in the "Singapore Free Press" of 18th February which says:
Singapore newspapers contain possibly the smallest wordage of foreign telegrams of any newspapers published in towns of equal importance. The 'Free Press' has made repeated efforts to secure additional news services for Malaya. For many years Reuter have held virtually a monopoly in foreign news distribution in this country, a state of affairs which is bad for the newspapers, bad for the readers and just as bad for the agency itself. The impression is given that Reuter is an official news agency, having Government backing. The attitude of the authorities to the introduction of another news service into Malaya would suggest that even Government officials sometimes regard Reuter as the only British news agency.
The same point of view is reflected from another great Dominion—India. Reuter deny that they have any monopoly in India, or elsewhere for that matter. I do not know if it still exists but I under-


stand that there was a clause in Reuter's contracts with Indian newspapers, whereby papers taking the service of any other agency could not have what is known as Reuter's "A" service. Officially, no doubt, the Government know nothing about this. I understand, also, that Reuter owns the Associated Press of India, which is the chief internal news-gathering organisation in India. India may be another illustration of the view that the services of Reuter to the Empire are possibly more appreciated in London than they are at the receiving points. I quote an opinion from a competent observer who has been travelling in India:
There is considerable agitation in India against the Reuter monopoly, made possible by Government assistance of long standing. Both British and Indian owned newspapers are anxious for stimulating competition.
Proceedings in the Assembly in India indicate that Reuter receives a subscription fee of some £4,000 a year for circulating information to Government agents, and that in addition they are paid to send to England supplementary messages such as the official text of the Viceroy's speeches. This might be termed an inverted subsidy, because one might ask whether such messages to Government agents are necessary.
Another situation has arisen in South America out of this subsidy. I understand that in South America, where the United States news agencies have a dominant position, those news agencies are exploiting the fact that Reuter have been receiving a Government subsidy and are encouraging South American papers to think of Reuter in the same terms as they think of Havas and the Deutsches Nachrichtenbuero. It is very unfortunate that this idea should get about, because subsidised news is always suspect, and the United States news agencies are taking advantage of the fact, apparently, to discredit Reuter on the ground that they receive this subsidy from the Government. One object of paying Reuter to distribute more news via Rugby was to get the British viewpoint better represented in South America, but in the result South American papers may be rather chary of the Reuter news, and the position of the United States news agencies in South America may be strengthened instead of the position of Reuter.
I do not wish to advocate any measure as being of advantage to any particular news agency, but I ask the Government to examine all these facts with a fresh eye. The matter is one which should be approached from the sole aspect of fair and equal treatment of all British news agencies and the quashing of all arrangements which impede the most ample and cheapest circulation of British news. I ask the right hon. Gentleman whether, on consideration of all the facts—and I hope we may hear the other side put forward — this subsidy to Reuter did indeed produce a news service which was published by the Dominions and received with pleasure by them, and whether it has indeed assisted in the dissemination of British news in the Empire and the world, as was its ostensible object.

9.19 p.m.

Mr. Noel-Baker: I have risen primarily to support what has been said by my hon. and gallant Friend the Member for Nuneaton (Lieut.-Commander Fletcher) on the subject of the subsidy to Reuters, but I am moved by the remarks of the hon. and gallant Member for Welling-borough (Wing-Commander James) to say something about the questions raised concerning the "Stangrove" and the "Stangate." I hope that the Undersecretary will not be diverted from the main point by the observations made by the hon. and gallant Member for Welling-borough. I would indeed go so far as to say, if he will forgive me for putting it in this way, that his intervention was thoroughly unBritish. Mr. Billmeir, whom he attacked, is a British subject. He served in the last War. He went to the front at the age of 17. He had a distinguished war record. Now the hon. and gallant Member comes and implies that for personal profit he is sending other men into danger and taking no risks himself. The sailors whom Mr. Billmeir has sent have wanted to go. I have heard them making speeches on many platforms asking the British Government to give the food that they might take it in to the starving people. He talked about the trade being not legitimate. Every one of those ships has carried a non-intervention officer, which in itself is the absolute guarantee of the legitimacy of the trade. The British taxpayer is paying money for these non-intervention officers who are guaranteeing the legitimacy of the trade.
What is illegitimate about this business is the blockade which the hon. and gallant Member supports, a blockade by a new method, which one would have thought an airman would be the very last to condone—air blockade, one of the greatest mortal dangers to Britain, being carried out over a long period of time by General Franco, and the hon. and gallant Member comes here and asks the Undersecretary not to take any notice of what is said about these cases on the ground that Mr. Billmeir is trying to make profits for himself in illegitimate trade. The hon. and gallant Member also raised the point, which he made a year ago, about many of these ships not having been British when the war began. He was answered a year ago in a very ample answer by the Secretary to the Department of Overseas Trade, who said that it was absolutely vital that we should keep our shipping laws, as they were in order that we should have as much shipping as possible under the British flag when war began. I hope that the Under-Secretary will now stick to the point of view which the Secretary to the Department of Overseas Trade upheld a year ago, will stand for British interests, will reject the so-called distinctions between legitimate and illegitimate trade in Spain, and will recognise that the hon. and gallant Member for Wellingborough has wanted in every way to do things which are fatal to British interests and has done so because he wants to help General Franco.
I turn to the question of the subsidy to Reuter. It is a very small sum of money, but it is a very big principle which is at stake. Democracy is now being attacked in many ways, and the Prime Minister told us at Birmingham that we may soon have to shed our blood in its defence. Democracy is governed by opinion. Opinion is formed in many ways—by Debate in Parliament, by free association in political organisations, and nowadays by the wireless—but everybody recognises that incomparably the most important factor in formulating the opinion which is the lifeblood of democracy is a free Press. In many countries of the world the Press is very far from free. In some countries it is totally under Government control. In some countries it is so venal that it is purchased by vested interests or even by foreign Governments. In some countries it is subject to the influence of advertisers

—I should like to think it was never subject to the influence of advertisers in this country. In some countries it is manipulated by Government subsidies. In some it is under the influence of Government guidance.
This was the method first adopted by Bismarck in the days when Europe used to talk about "Bismarck's reptile Press." I wonder what that Europe would have thought of our national Presses to-day? Every one of these methods is open to great objection. They are all wrong in principle, but none is more wrong in principle, more open to objection from the point of view of the good working of democracy, than that of the Government subsidy. This £6,000— after all, a trifling sum to Reuter in view of their annual turnover—is, as my hon. and gallant Friend said, doing harm to all British agencies throughout the world by leading foreigners to believe that we are exercising an influence over our Press and that our Press agencies are, as some foreign agencies are, organs of the Government. I am even told that in South America Nazi agents have made a photo stat of this Vote and are putting it about to show that our Press is as corrupt as is that of other countries. I hope the Under-Secretary and the Government will listen to the plea that has been made and will consider the facts that have been brought forward and will re-examine the proposal that they have made.

9.26 p.m.

Mr. Storey: I may perhaps be allowed to say a few words in response to what my hon. and gallant Friend has said. I should like to express my appreciation of the attitude that he has adopted. I realise that he is not doing it with any idea of attacking Reuter but rather with the idea that he wants to see the British viewpoint properly distributed throughout the world. I do not know that I can answer all the questions that he has raised, but I will try to deal with one or two. He asked particularly about the distribution of this service in Australia. It is true that there has been difficulty about the distribution of this wireless service in Australia, and, in fact, the newspapers there were not able to take it during the crisis of last autumn. The newspapers want the service, but I understand that there are technical reasons which so far have prevented the Commonwealth Gov-


ernment granting the necessary licence. I believe that steps are being taken and we hope that shortly the licence will be granted and the service will be available.
The hon. and gallant Gentleman then raised the question of Malaya. There is very keen newspaper competition in Malaya. One group of newspapers is entirely satisfied with Reuter's service, but another wants an alternative service. To say that there is any news famine is quite untrue. The hon. and gallant Gentleman quoted from some papers. Perhaps I may quote from another. The "Malaya Tribune," in an article on 18th February, said:
The 'Singapore Free Press 'headed the report with the words' Artificial News Famine in Malaya' and declared that there was a great need for an alternative service. If the heading means that there is a famine of artificial news, it is an excellent thing which everyone will applaud. If the meaning is that an artificial famine in news has been created, we most strongly refute the suggestion. So far from being a famine, there is a glut of news. Reuter's service, which 18 months ago was 27,000 words a month, has been increased to nearly 100,000 words. As to the quality of the service received from Reuter there is every reason for satisfaction. The agency, with its correspondents in every part of the globe has unrivalled facilities for securing information, and it despatches it with the utmost speed. The fairness of the news supplied is unquestioned. The 'Free Press' makes the statement that 'Reuter is the only full cable and wireless service at present available to Malayan newspapers.' We entirely fail to understand this. Any service is available if a newspaper is prepared to pay for it and for the cost of cabling. If the statement had been that Reuter is the only full cable and wireless service at present available to Malayan newspapers at such a reasonable rate, that would have been more to the point.
That, I think, is the point. There is a service which Reuter can supply at a reasonable rate because of its vast organisation, which enables it to distribute its service at a cost which other agencies cannot compete with. If it was not for that organisation, they would not be able to compete, as they have done successfully, with heavily subsidised news services put out by foreign news agencies. There is, after all, no other British news agency organised to supply such a Service. Foreign agencies cannot supply at a reasonable cost. I assume that my hon. and gallant Friend does not suggest that we should give these facilities to any foreign news agency.
The hon. and gallant Gentleman also raised the question of South America. I agree with him that it is a very serious consideration if the acceptance of this assistance is going to enable anyone to say that Reuter is a Government controlled service. It was a matter to which Reuter gave very serious consideration whether by entering into this arrangement, by which they would increase their wordage in this service, they would lay themselves open to the charge of being Government controlled. The only condition that Reuter have to fulfil in order to receive such assistance is as to the amount of news that they distribute and how they distribute it. They would prefer not to accept any assistance whatever if there was any Government interference in the collection or selection of the news. With that complete independence in the collection and selection of the news, no one can say that it is a Government controlled service. Reuter do not want a subsidy It is only because they realise the vast importance to this country that British news and world news should be presented to the newspapers of the world as seen through British eyes, arid not through foreign eyes, that they are prepared to take this assistance in their distribution.
Other Governments are pouring huge sums into building up these wireless news services. They are heavily subsidised. They distribute news to other countries at a fraction of the cost that Reuter can, and it goes without saying that where a newspaper, say, in Japan, can get news at a fraction of the cost that it has to pay for Reuter, it is inclined to take it. But if that news is news of Britain as seen through either French or German eyes, it is not the kind of news that we want distributed. We want news of British and world affairs as seen through British eyes. It is only if Reuter can meet that competition and put out a sufficient service at a reasonable rate to enable newspapers to take it that we can get that news distributed. Therefore, I hope the House will agree to this measure of assistance. I repeat that it must only be on this basis, that the Government do not interfere in any way whatever with the collection or selection of the news and that the only obligation that Reuter undertake is as to the amount of news that they put out and where they distribute it.

Lieut.-Commander Fletcher: I understood the hon. Member to say that there is no possible alternative British news service to Reuter in Malaya. I have extracts from two Malay papers. The "Straits Times" says that for nearly five years it has been striving to give the country a second British news service, and the "Singapore Free Press" says it has made repeated efforts to secure additional news services. Is it the case that these papers have tried to do something which in fact it is not possible to do and that there is no alternative?

Mr. Storey: I think I can best answer the hon. and gallant Member's question by asking him a question which I asked him once before. What is the alternative service that they wish to take? I know of no other British service than can supply them.

9.35 p.m.

Mr. Remer: I would not have intervened if I had not only recently returned from the Island of Jamaica. When I was there I was alarmed to find that there was no sort or kind of really British news available for the people of the island. When I made inquiries from the leading newspaper proprietor, he informed me that he was not allowed to publish in his paper the Empire news which is broadcast every night by the British Broadcasting Corporation. That news came to me 4,000 miles across the Atlantic on board steamer on the way home. It came through quite clearly; it was very good and in no way prejudiced. In Kingston, Jamaica, they were not allowed, for some reason or other, to use that news. The type of news they were getting was the most deplorable, cheap-jack, Yankee news, which is no good to British interests and not the kind of news which anybody on the other side of the House would tolerate for a moment. I have been told since I arrived back that there is some Act of Parliament which prevents this news being published in the newspapers, even in British Colonies like Jamaica. If my right hon. Friend would look into that matter, he would be doing a great service to British interests, not only in that island, but throughout the West Indies.

9.37 p.m.

Mr. Butler: I will first deal with the shipping questions raised by the right hon. Gentleman the Member for Gorton

(Mr. Benn). I would like to assure the hon. Member for Maryhill (Mr. J. J. Davidson) that the Government have no intention of adopting a nonchalant attitude towards shipping questions. The best proof of that is in the action taken in these cases. In introducing the case of the "Stangrove" I would remind the House that it was the action of the Government which, although, I agree, after some regrettable delay, secured the release of the ship. It was particularly unfortunate that, although orders were issued in Burgos, through the action of the Government, for the release of the ship, a storm arose and the ship was blown upon the rocks. The right hon. Gentleman raised a question first about the "Stangate." On the first occasion upon which the "Stangate" was apprehended by the forces of the Burgos Government, it was released, thanks to the immediate intervention of His Majesty's Ship "Intrepid." The reason for that was that the "Stangate" was on the high seas, and, although it had no wireless, another steamship acquainted the British Navy, and immediate and successful action was taken. The circumstances of the next occasion when the "Stangate" was apprehended I described in answer to a question this afternoon. It was then within territorial waters, and I said:
His Majesty's Government do not propose to object in cases where the Spanish Government, after prohibiting the entry of ships into certain portions of its territory, prevent, by appropriate measures taken in territorial waters the entry of ships into the closed ports.

Mr. Benn: Did the Spanish ship which took the "Stangate" herself enter territorial waters, or did she threaten the "Stangate" from outside and then apprehend her when she herself proceeded on the high seas?

Mr. Butler: As I understand, she was apprehended within territorial waters, and that is why the Government have adopted this attitude towards the case. The right hon. Gentleman asked why, after that had taken place, the "Stangate" was not taken from her escort on the high seas. The reason was that when the "Stangate" was taken she was within territorial waters and that was the basis of the capture. There has been some criticism of the delay In the case of the "Stangrove." It is to be noticed that


the "Stangrove" had not got wireless. If she had had it, it might have been possible for her to communicate with the Navy and for her release to have been effected in the same way as the "Stan-gate" was released on the first occasion. Unfortunately, there were no ships in the vicinity, and the result was that she was captured. I accept as in general correct the statement of the case which was made by the right hon. Gentleman. His main criticism was with regard to communications from the ship's captain to his home. The right hon. Gentleman said he did not mind about the owners. I have made inquiries from the Consul and the naval authorities in Palma, and I am informed that nothing was given to them with a definite destination or address upon it which they did not send. Therefore, I cannot hold them guilty for not having made any communication.

Mr. Benn: These men were prisoners in their ship. They were visited on the 7th and 8th by the Consul. The captain is dead now, but it is said by his fellow officers that he wished messages to be sent to his wife. His wife never received any messages, although they were given to the Consul. I cannot understand why that Consul allowed these men to remain prisoners for a fortnight without making any communication, either to the owners or to the captain's wife.

Mr. Butler: I have said that, according to our information, the authorities were not given any such communications to forward. In regard to what the right hon. Gentleman has said about His Majesty's Consul, I should like to say that he has a long record of valuable service in looking after British interests, and that no man has been more hard worked or has done better service. I am informed that His Majesty's Consul at Palma was in touch with the crew the whole time and that the crew was visited, not only by the Consul after the date which the right hon. Gentleman has mentioned, but by the naval officers who kept closely in touch with the crew. No one will regret more deeply than we do that this gallant officer's wife should not have received the message that was her due. I can only imagine that there must have been some misunderstanding. It was certainly not due to any dereliction of duty on the part of our authorities. I should like to pay a tribute to the bravery

of the captain of the "Stangrove." His action was in the best traditions of naval sea captains. I would draw the attention of the House to the report of the court of inquiry, which said that:
After the ship struck, the conduct of the master, officers, and crew was beyond reproach, and that the master exhibited courage and leadership in arranging for the rescue of his company, and remaining on board himself until all were safe. We feel that his action in remaining on board was perhaps unnecessary, but it was his considered opinion at the time that this course was not fraught with exceptional danger.
That illustrates that the master stuck to his ship. He exhibited qualities of leadership and I accept what the right hon. Gentleman has said about his previous conduct in a previous experience. To proceed with the case as presented by the right hon. Gentleman: He raised the question of the difficulty that the master and the ship's company had in raising steam. I would refer again to the report of the court of inquiry. That was that this ship began to drag its anchor at about 7.20 p.m.
The right hon. Gentleman in his statement said that before 9 o'clock at night she was on the rocks. There was great difficulty in raising steam. The reasons for it are given as follows by the court of inquiry: '' This failure was due to the fact that fires had been extinguished on 7th February by order of the master and although steam had been again raised on Saturday, 18th, for auxiliary purposes, it had been extinguished that same day with the master's consent. On 23rd February, therefore, the engineers were faced with the problem of raising steam in emergency with a 44-years-old Scottish boiler and coal and it was obviously impossible to produce any pressure under a period of at least eight to 10 hours. "Then we have to examine whether it would have been wiser perhaps to raise steam earlier. This is the finding of the local court. Remember the ship went on to the rocks at 9 p.m. and that it would have taken some eight to 10 hours to raise steam from this old Scottish boiler. The report reports:
The weather conditions at about noon and during the afternoon of the 23rd February were threatening. The state of the barometer and the general weather conditions should have made it clear to experienced seamen that bad weather was approaching. It seems clear to us that the master was warned of this probability during the afternoon by at least three people, the chief officer, Mr. Evans; the


non-intervention officer, Monsieur de Graaf; and the Spanish officer of the Guard-Falange Naval, Don Raphael Forteza. The temporary drop in the strength of the wind between 2 and 3 o'clock and a general lack of faith in his barometer seemed to have lulled the master into a false sense of security, with the result that he took no precautions whatever for the safety of his ship until after 7 p.m., when he had received an urgent message from the Spanish naval base, and conditions of sea and wind were already dangerous.
The House will see that in fact the inquiry did go carefully into this point and, while paying a tribute to those in charge of the vessel, does find that if steam had been raised earlier—and there was coal on board to do so—it might have saved this unfortunate vessel from its fate. So much for the case of the "Stangrove" I repeat that it is a case which I and His Majesty's Government most deeply regret. I will conclude this subject by saying that it was thanks to the action taken that the orders were issued, unfortunately too late, to secure the release of this vessel. The hon. Member for Wolverhampton, East (Mr. Mander) raised a question about the Non-intervention Committee's expenses. These expenses are not yet ended, but I am speaking now, some time after the Committee stage, when I find I said that the expenses were being reduced. I can now say that it is probable in the future and I expect the near future, that the expenses will be drastically curtailed. I cannot go any further to-night for it is a matter which concerns several foreign Governments with which we are in touch.
A question was also raised about the Passport Control Officers. At this time of crisis the work done by those officers is really remarkable. At Question Time to-day I said that we were considering increasing the staff at Prague, as we had to do at Vienna, owing to recent events. As to whether these officers are on the established list, I am informed that they are unestablished.
The hon. and gallant Member for Nuneaton (Lieut-Commander Fletcher) raised the whole question of the subsidy to Reuter. I am unable at the moment to answer the specific questions of the hon. Member for Macclesfield (Mr. Remer) and I am not sure that they arise on this Vote, but I will look into them and send him a reply. The hon. Member for Sunderland (Mr. Storey) replied, I think, in the main to the Debate on this question and, if I may say so, did so very ably. On the

question of the internal management of Reuters I do not think I can add anything to what he said, but there are one or two other points which were raised in the Debate. The assistance to Reuters, as I informed the House in the Debate on the Committee stage, was done in a period of emergency and is a purely emergency arrangement. The assistance took the form of putting an extra wordage at their disposal to enable Reuters to increase the amount of their output from the General Post Office wireless stations. The aim of the assistance was to secure the publication of more British news. I think that this was secured chiefly, as a result of this subsidy, in foreign countries rather than in the Dominions.
No guarantee was given by Reuters or asked for about their cable services and I have no reason to suppose these were in fact diminished. As to the contents of the Reuter services, a, point which was raised by the hon. Member for Derby (Mr. Noel-Baker) and referred to by the hon. Member for Sunderland, these were left entirely free and the whole object was to raise the amount of the British news services at a time of emergency. The hon. and gallant Member referred to his trouble in not securing a better Press in Malaya and I only hope that Reuter will take the advantage of this Debate to report the whole of the hon. and gallant Member's speech. I am sure it woud be well worth while. At any rate, I believe the only thing in common between the B.B.C. and Reuter was that they both made a reference to him, so that he does at least form a link between the two great competitors. This grant was not given to Reuter in the belief that there are no British agencies but Reuter, but for reasons, to which the hon. Member for Sunderland referred, that Reuter provided the most convenient channel for achieving a certain objective.
When the House reflects that the idea was that this comparatively small sum, compared to what foreign nations subscribe, was to increase the amount of daily output from 1,000 to 3,000 words, and reflects that many of the American news agencies put out something like 20,000 words a day, it will be realised that although there is an important principle at stake, the extent of the problem is not as broad as the House might imagine. I should like in conclusion to say that the Government will give careful


consideration to the points that have been raised and, if I may say so, some of the points which have been made by hon. Members in the Debate will be extremely useful to the Government. I am sure we shall have great interest in studying them. I have replied to the main points raised in the Debate on the Report Stage of these Estimates and I trust that the House will be ready to come to a decision.

Motion made, and Question proposed, "That this House doth agree with the Committee in the said Resolution."

9.55 p.m.

Mr. Noel-Baker: I do not want to detain the House, I only want to ask again of the Noble Lord a question I put in Committee. Have any decisions yet been made as regards bringing the new categories of refugees within the scope of the Inter-Governmental Committee on Refugees or the League of Nations High Commission? In Committee I urged upon him that the Spanish refugees ought now to be put under the auspices of the High Commissioner of the League, who is also the new director of the Evian Committee.
Since we had that Debate we have now had a new category of refugees, those who have come from Czecho-Slovakia. There will be a large number of the leaders of Czecho-Slovakia who will now come as refugees from their own country to a foreign land. We all hope that their absence from their native country will be very short. The point is that they will be refugees and will need help and support. I venture to urge once more on the Government that it is a matter of urgent public importance to our own country and to the world that this refugee problem, which is continually extending in new countries, should be dealt with as a single problem and through the organisation which has been set up.

9.57 p.m.

The Paymaster-General (Earl Winter-ton): I regret that the answer which I am going to give the hon. Gentleman will not wholly meet the point which he has just raised. Perhaps I may take that last point first. I understand that he would like to see one organisation covering the

whole question of refugees. So far as the Evian Committee is concerned we have, as I explained on the Committee stage of the Supplementary Estimates, the closest working arrangement with the League of Nations. It is impossible, for the reasons which I then gave, for us to go further than we have done for the simple reason that it is not possible for the United States to be a member State, although they are a most important member of the Evian Committee. His Majesty's Government have taken the view that the help of the United States and of the people there— the Government have the people behind them—towards the assistance of the involuntary migrants from Germany is of such great importance that every effort should be made to meet their point of view.
None of the member States on the Evian Committee has ever doubted the value of that committee as a separate entity, but what we have done, as was explained in the Press communique which was issued after the last meeting, has been to try to increase the relationship or the co-ordination with the League of Nations by appointing a very distinguished former civil servant, Sir Herbert Emerson, who is League High Commissioner, to be also the director of our committee. I can assure the hon. Gentleman, whose interest in this subject we all acknowledge, that I am quite convinces that the present arrangements in relation to involuntary migrants from Germany is the most efficient. That is in regard to the general organisation. I appeal to the House not to press me further on the point of this rather delicate question of the attitude of the United States towards the League of Nations.

Mr. Noel-Baker: I do not at all want to renew the argument that we had in Committee about the United States joining the League of Nations organisation. The Noble Lord knows that the United States takes the very closest part in the work and did at one time pay subscriptions and take a closer interest than any member except ourselves. On the whole it is very satisfactory, and I hope there will be a very much closer link, especially in view of the extension of the work of the Committee to new categories of refugees. I hope that whenever there is an extension of the refugee problem the principle will be followed that it will be


Sir Herbert Emerson who in one capacity or another has charge of the matter.

Earl Winterton: I can answer that question. I have consulted my hon. Friend the Under-Secretary of State for Foreign Affairs, who is responsible for activities relating to the League of Nations. I am not responsible in regard to these activities but for the Evian Committee. I can give the assurance that Sir Herbert Emerson either in his capacity as League Commissioner or as the director of the Evian Committee will do all that he can to further the interest of all refugees. I must further tell the House that as soon as I heard of the calamitous happenings in Central Europe last week I called a conference of the various Departments concerned and Sir Herbert Emerson and discussed what steps should be taken by which those affected by the events might be assisted, whether they came within our category or not. We got into immediate touch with Prague and everything possible is being done to get these unfortunate people out of the area. I should be disingenuous, however, if I said that at this moment we have been able to achieve very much.

Mr. Batey: It seems that the refugees from Central Europe are in a different position from those who came from Spain. It has been suggested to me that most of them are likely to belong to the professional classes, and that those refugees that are being assisted by public, money do not belong to the working classes. Are the working classes given the same chances of coming into this country as refugees as are the professional classes?

Earl Winterton: I am not quite sure whether the hon. Gentleman has interrupted me or not or whether I must ask to be allowed to speak again, but my answer is that no sort of differentiation is made between these involuntary migrants as we describe them. Whatever their religion, political views, position or class the same treatment is accorded to all because we feel that they are all in an equally bad position.

Mr. Godfrey Nicholson: As one who is intimately connected with several of the organisations dealing with refugees, I rise merely to say that a very large section of opinion in this country is exceedingly interested in the question of refugees. We appreciate very much indeed what the

Noble Lord is doing and we hope that he will have the full support of His Majesty's Government in everything that he undertakes.

Mr. Benn: Do we understand that we must now address questions to the Noble Lord relating to refugees both internal and external in Czecho-Slovakia, and that he will be able to tell us, for instance, how many of them have succeeded in escaping and what is being done with the remainder? Our first thought is to assist the escape of those unhappy people who wish to leave Czecho-Slovakia, and then there is the question of fully investigating and getting the full facts of the financial transactions so far as we know them.

Earl Winterton: By leave of the House I would reply that it would be better if questions were put to my right hon. Friend, if they are purely Foreign Office questions. My Noble Friend or my right hon. Friend the Under-Secretary invariably consults me before replying to questions concerning the Evian Committee and its activities.

CHINA (CURRENCY STABILISATION) BILL.

Order for Second Reading read.

10.5 p.m.

The Chancellor of the Exchequer (Sir John Simon): I beg to move, "That the Bill be now read a Second time."
As the House knows, this is a Bill to facilitate the establishment of a fund to check undue fluctuations in the sterling value of the Chinese dollar. The reasons for the Bill are very shortly stated in the Preamble. The Preamble states, first, that it is proposed that there should be a fund for the purpose of checking undue fluctuations in the sterling value of the Chinese dollar, and it goes on to say that it is expedient, for the protection of British commercial and financial interests, to facilitate the establishment of the fund. The House will not need to be reminded at any length of the great importance and long standing of the part played by British commerce and finance in this immense country of China. If I give the House two illustrative figures, they will


be sufficient for the purpose. If one goes back to about 1875, over 90 per cent. of the total imports passing into China came either direct from the United Kingdom or from India or Hong Kong; and, at the same sort of date, over 60 per cent. of the Chinese exports passed to one or other of these destinations. That, of course, was due to the enterprise of individual British merchants and commercial houses, and is undoubtedly a most important chapter in the history of our overseas commerce. Large indeed has been the extent to which industry in many parts of this country in the past has worked for the Chinese market. If one passes right on to the year before the outbreak of the present hostilities in China in 1937, and takes the year 1936, it is true to say that in 1936 the British Empire still held the first place both in the figures of imports and in the export trade figures of China.
Shortly before these hostilities began the Chinese Government was engaged in a unification of its currency, which was very successfully carried through, and a reorganisation of its central banking system, and there is no doubt at all that these improvements in technical arrangements would have further assisted British trade with China. I do not say that our total trade with China is a very large percentage of our total world trade; it is not; but it is a very important trade, well worth preserving and assisting, the more so, of course, because China is a country with an immense population, and, if there were but a small increase in the purchases per head of the population of China, that would make an enormous difference in the size of her external purchases.

Mr. Gallacher: If Japan would permit.

Sir J. Simon: I do not think there will be any difference of opinion as to the importance and value to this country of our trade with China, and there can be no doubt, of course, that if that trade is to be promoted a sound Chinese currency is a very material element. I would remind the House of one or two facts in connection with the recent development in the currency system of China. At the end of 1935, China gave up the silver standard, and made arrangements for supporting her currency by being ready to buy Chinese dollars for sterling at the ratio of

about 1s. 2½d., and for United States dollars at a corresponding rate. At the same time she arranged to hold her monetary reserves in currencies such as sterling and United States dollars. That was a technical operation which required to be very skilfully handled, and, in the light of what followed this effort, I do not think opinion will differ that China would certainly have reaped her reward from these currency and other reforms had it not been for the intervention of war or some other great calamity. The outbreak of hostilities in July, 1937, has been, of course, a very severe test for this new currency system, as severe a test as any to which a new currency system could be exposed.
The first result, inevitably, was a heavy drain on the foreign exchange resources of the Chinese Government; and, while the Chinese authorities again adopted very well devised technical measures, which I will not spend time in describing, and while Chinese outside China patriotically supported their country by continuing to send their normal remittances and subscribing to Chinese War Loans—it is very remarkable how that has persisted—the strain was so great that, as I dare say the House will recall, about a year ago the Chinese authorities decided that they would reduce the value of the Chinese dollar from 1s. 2½d. to about 8½d. That change was carried through in an orderly manner and with a minimum of disturbance or undermining of confidence, and since then, considering the trials of recent months, it is very remarkable how China has found it possible to maintain her dollar at a fairly steady level. All this shows that, if the House is prepared to join in assisting and backing the exchange equalisation fund which is now proposed, it will be doing so, as far as the reputation and position of China are concerned, in relation to a currency which has passed through very difficult trials with very remarkable success.
The scheme in which we now invite the House to authorise us to join is a scheme for the purpose of supporting the Chinese currency, and our contribution, or rather, our guarantee, will not be available for any other purpose whatever. The scheme is that there should be a fund which altogether would amount to £10,000,000. Of this amount, £5,000,000 will be contributed by the two Chinese


Government banks, the Bank of China and the Bank of Communications. The other £5,000,000 will be contributed in part by the Hong Kong and Shanghai Banking Corporation, which is a British Bank registered in Hong Kong, and in part by the Chartered Bank of India, Australia and China, which has its head office in London. As I have said, the fund will be used solely for exchange operations—for the purchase or sale of Chinese dollars. If there occurred an undue fall, or the prospect of an undue fall, in the dollar, the fund, of course, would purchase dollars for sterling. If the operation went the other way, it would make a reciprocal transaction.
It is not altogether unlike our own Exchange Equalisation Fund, but, of course, there is this obvious difference, that our Exchange Equalisation Fund holds gold. There will be none of that in this fund. Here the contributions are in the form of sterling, and the stabilisation fund will be used, as I have said, for the converting of sterling into dollars and dollars into sterling.
The fund will be managed, as is stated in the White Paper, by a committee of five members: two appointed by the Chinese Government banks, one by the Hong Kong Bank, one by the Chartered Bank, and the remaining member will be a British expert appointed by the Chinese Government in agreement with the Treasury, with the approval of the Hong Kong Bank and the Chartered Bank. I have no doubt that a committee so constituted will conduct these operations as skilfully as they can be conducted. The contributions made by the Hong Kong Bank and the Chartered Bank will receive interest every six months at the rate of 2½ per cent. per annum. That rate of interest, which, of course, the British banks are entitled to receive because they are providing this large fund, will be due to them from the Chinese banks. The Chinese banks have undertaken to pay it, and, having regard to the high reputation which the Chinese financial institutions justly enjoy, I feel no doubt that we may expect that interest to be duly paid. If the fund itself does not earn that amount of interest, the sterling portion of the fund being invested in Treasury Bills or something of the kind, the difference will be made up by the Chinese banks. If, for any reason, the

Chinese banks fail to pay this interest to the British banks, the Treasury, by the terms of the Bill, will guarantee payment of what is short in that interest to the British banks. I hope I have made plain to the House that that ought not to occur, and that we do not anticipate that it will occur. It is only a further protection to the British banks.
The Treasury has no further liability as regards interest, but a liability might arise if the fund is wound up. It is proposed that the fund shall continue for a year, but there is a provision that it might continue beyond that if the persons concerned all agree, and if and when the fund is wound up the question will be: On the sum total of its operations, has the fund been preserved intact, or has the fund swollen, so that the capital content becomes larger, or has the fund lost? The provision is that when the fund is wound up the capital assets, whatever they are, sterling or dollars, are to be distributed, in the same proportion as their respective contributions, to the banks concerned. If that amount is exactly equal to the amount which the British banks contribute, the thing will balance itself out, and there will be nothing further for anybody to do or to find. If when the fund is wound up, it has gained some further assets, half of the addition will go to the British banks, and the British banks will transfer it to the Treasury. We shall get in return for our guarantee, our share of whatever profit is made.
If, on the other hand, when the account is wound up, the capital account of the fund shows that there has been a loss, that loss has to be met, and it is part of that loss, the share of the British banks, that we shall in that event have to find. It is impossible to say in advance which of these things will happen. I only observe that in operating an exchange fund of considerable magnitude like this, the extent of the amount and the knowledge that it is being skilfully, promptly, and impartially used, is in itself an influence which has a great effect in controlling undue fluctuations. Because this account exists and is in charge of a committee of management, it may maintain the currency of China without its registering any considerable loss. These are the provisions of the Bill, and I think, with that explanation and with the contents of the White Paper, the House will be able to judge whether it is not a


Measure to which we ought to give our general support. I hope that it may be so.
It is, I believe, in the interests of the British export trade, and is in that way quite directly connected with the interests of a great mass of working people in this country who are working for a foreign market: it is a very desirable effort to maintain a connection with the Far East which has been of old standing and of very great advantage to this country. I trust that the House will think that the arrangements which we have been able to make have been skilful and prudently made and that they are such as the House will approve.

Mr. Bellenger: Does not the right hon. Gentleman remember that I put a question to him on a certain aspect of this Fund, and he asked me to wait for an answer until he moved the Second Reading of this Bill. The question was as to whether the operations of this Fund would be conducted in co-operation with the United States of America and France in a somewhat similar manner to the tripartite agreement of the present time?

Sir J. Simon: I ask the hon. Gentleman to accept my apology. I remember his question perfectly well. I did not deliberately omit it, and I will add a word about it. We are making the efforts which I have explained. It is right to say that, in a different form, efforts to assist the financial situation in China have been made by other governments. The American Government, for example, have been purchasing silver for some time in very considerable quantities, and that all helps, but it helps by another route. So far as this particular proposal is concerned, I must ask the House, if they are prepared to accept it, to accept it as our contribution to this matter, and I am not concealing from hon. Gentlemen or from the House any international arrangements. As far as I know, there are no international arrangements in this connection.

10.29 p.m.

Mr. Pethick-Lawrence: The right hon. Gentleman, in moving the Second Reading of this Bill, has made a resumé of trade relationships between this country and China over some little period of history. For my part, I like to think that the great and important trade which

has taken place for so many years between this country and China has been due to in part, at any rate, to similarity between the British and Chinese characteristics in the sanctity of the spoken bond. Anybody who knows China, knows the great reliability that can be put on what the Chinese undertake. I hope and believe that they have found the same with regard to their opposite numbers in this country. In these days, when promises are not always kept in the letter or in the spirit, the fact that these two great countries have found this common ground, is something of which we can both be proud, and I believe that it has played a large part in the great trade which has been carried on between our two countries.
The Bill can be looked at from a number of different points of view, and I want to say a few words first on the financial aspect. The House and those in the country who have some little knowledge of finance are beginning to understand something of the meaning of Exchange Equalisation Accounts. We have a very large one in this country, running to some £550,000,000. Compared with that large sum, this £10,000,000 to us may seem a small amount, but it would be wrong to think that this £10,000,000 will be ineffective or will not last a considerable time in stabilising the pound and the dollar. It is only necessary to remember that £10,000,000 represents at present something like 300,000,000 Chinese dollars, to realise that this sum covers a very considerable amount of Chinese currency.
I can substantiate what the Chancellor of the Exchequer has pointed out, namely, that this is not a case of the British Treasury being asked to come in to support a currency which is going downhill fast. The Chinese currency has been and, I believe, will be supported by very strong forces from within and without China, and all that we are doing in giving it this additional support is to add one more buttress to a system which has already very considerable strength from its own resources. We can, therefore, look on this fund as being a very considerable help. The particular arrangements contemplated are set out in the White Paper, and the House broadly understands what is proposed. It is a very peculiar arrangement, and in parts the White Paper does not very lucidly or even grammatically explain it.
What happens is that. in the first place, two British banks will supply half the money. Until there is a drain upon the sterling resources that are being subscribed this sterling will be able to be invested. Therefore, while it is in that form it will itself be earning interest. In so far as it falls short of earning 2¾ per cent., that is to be met by a payment every six months by the Chinese banks. Further, as the sterling is absorbed in the exchange and earns no interest, the Chinese banks will have to find the full money. I do not think there is any great risk about that, but if the Chinese banks were to fail to find their balance of the 2¾ per cent., it is not unreasonable that the British Exchequer should be called upon to reimburse our banks.
If and when the fund is wound up there must be, as the Chancellor says, a settlement. The British Treasury is bearing the racket of the loss, and, therefore, if there should prove to be a profit on the working of the fund—we all hope that the tragedy which has afflicted China will be brought to an end—then the British Treasury which has borne the loss ought naturally to obtain the profit. That is the question which I put to the Chancellor of the Exchequer the other day, and I find it answered in the White Paper. But it is there in rather a curious form. I should have thought the undertaking that any profit should come to the Treasury would be an undertaking given by the banks, but, according to the White Paper, it is an undertaking given by the Treasury. I think the meaning is clear, although the words are both ungrammatical and obscure, but I presume that the Chancellor of the Exchequer and the Treasury have satisfied themselves that the meaning is embodied in the agreement they have with the banks.

Sir J. Simon: It is, in fact, an undertaking given by the Chinese banks to His Majesty's Treasury.

Mr. Pethick-Lawrence: I fail to understand that.

Sir J. Simon: It is, in fact, an undertaking given by the British banks to transfer what they receive in excess of their capital subscription.

Mr. Pethick-Lawrence: That is what I should expect, and I am glad to have a

confirmation that I am right. I pass to the commercial aspect of this matter. The effect of this transaction, in so far as it operates, will be to assist in keeping up the dollar in terms of the pound. The effect of that will be to make it possible for the Chinese to continue to purchase British articles at a reasonable price, and it will also have the effect of preventing the value of Chinese articles in this country falling to so low a figure as unfairly to compete with articles made here. In so far as it does either or both, it is providing an incentive, in a sense an indirect subsidy, to British trade, and this encouragement to greater trade is just that kind of assistance which the party on these benches have always supported, particularly in a case where it is a friendly country with whom we are dealing. Therefore, I have no hesitation in supporting the principle of the Bill.
Lastly, I come to the political aspect. In so far as the Bill goes, it is like the money which may be given under Part II of the Export Credits Guarantee Act, a definite support to China in its struggle against Japan, and any action, whether parallel or allied, which effects the same purpose which may be taken by the United States and France will be welcomed in this country and also in China. Apart from the direct support which this Bill gives, it is, of course, a gesture, and whether or not the Government care to admit it, it is a gesture definitely in favour of China during her struggle. As such, we on these benches welcome it as support for a peace-loving nation against an aggressive Power.
On this point, I cannot refrain from making two passing remarks, the first relating to the past and the second to the future. While the Chancellor of the Exchequer was speaking friendly words about China's relations with this country, I could not help wondering whether there was not a little remorse in his heart for the part which the Government played during the recent unpleasantnesses, or whatever they are called, between China and Japan, and the part which he himself played some years back; because it is clear that the cruel, aggressive war which the Japanese are waging with China at the present time has not only brought misery, suffering, destitution, and death to a large section of the Chinese people, but is the fundamental cause which has been destroying so large a part of the


trade between China and this country and which makes this Bill necessary. We on these benches—and I believe the judgment of history—will not acquit the Government of part responsibility for allowing that war to go forward to its present stage.
With regard to the future, this Bill is, as I have said, a gesture, and it gives some tangible support to the Chinese. Of course, it does not go very far in that direction, and I do not suppose that any hon. Member on this side or on the benches opposite would say that it does. Personally, I am a little doubtful whether it goes far enough, even when one adds the support which I hope the Government will give China under the second Part of the Export Credits Guarantee Act, to which I have already referred. I think therefore that the Government would do well to consider now how far they can take any other action which will strengthen the Chinese and prevent the Japanese from attempting to obtain a stranglehold upon China. For instance, there is the present Anglo-Japanese trade treaty. It is important that we should trade with all countries, but I am not sure that it is important that we should trade with an aggressor so as to enable that aggressor more easily to prosecute a war against a peace-loving State. I hope the Government will consider seriously this question of trade relations with Japan. After all, important as trade with Japan is, the friendship of a great Empire such as China and trade with that great country are more important to us, even from the narrow point of view, than the friendship and trade of Japan, particularly when she is an aggressor State. Though I shall ask my hon. Friends to allow the Bill to have a Second Reading, I hope that the Government will stiffen their opposition to the aggression of Japan, as they are being driven by the logic of events to do in another case elsewhere. It is only through world peace and when the relations between nations exist upon a civilised basis of law, that the life of the world can recover and that trade and prosperity and the liberties of people can be preserved.

Sir Irving Albery: I wish to ask my right hon. Friend the Chancellor of the Exchequer one question. In the event of the Treasury incurring any loss, it will be

made a charge upon the Consolidated Fund. Will that, in any way, come under the audit of the Comptroller and Auditor-General, and, as a result, will any report thereon be made to the Public Accounts Committee?

10.41 p.m.

Mr. Mander: We desire to support the Second Reading of this Measure in the belief that it will be a gesture of good will, and of more than that, to China in the grave troubles in which she is involved and for which we ourselves have had so great a responsibility in the past. It is interesting to find that there is, apparently, a certain amount of support, even in Japan, for the Measure. I noticed in the "Times" the other day the following:
Chugai Shogyo,' the leading Japanese financial daily newspaper, discusses the British decision to establish a stabilisation fund for the support of Chinese currency in terms which, considering the atmosphere, may be regarded as support. The article is interlarded with Sharp reproofs for the British attitude to Japan, but those are customary at present, and the substance of the article suggests that in financial circles in Tokyo the British action is understood and even approved.
That really makes one wonder. I cannot help feeling that we shall have to do a great deal more to secure a free entry for British trade in that part of the world than we are doing at present. I do not know whether it would be possible for the Chancellor of the Exchequer to say anything about the freedom of British trade in the neighbourhood of Hong Kong at the present time, for we all know that it is becoming increasingly difficult for British interests to escape the stranglehold which Japan is deliberately placing upon all British trade in that part of the world. It may be that the Japanese are not displeased to see a Measure of this kind which they think is not going to do any harm to them. I regret that the Government, in their usual way, are bringing forward this Measure in far too narrow a spirit. The Preamble says:
Whereas it is expedient, for the protection of British commercial and financial interests, to facilitate the establishment of the said fund.
That is one way of putting it, but the real object of the Measure is something infinitely bigger than that. It is intended, I take it, as some contribution to the pacification of the world, certainly to the pacification of that part of the world, and in order to assist China in her terrible


and, as I believe, growingly successful struggle against the might of Japan. The Government are in fact, although perhaps it does not represent itself to them in this light, carrying out one of the Resolutions of the Council of the League of Nations. I know that until recently the League of Nations has not interested them very much, but I was very glad to hear in another place to-day that their policy now is "Back to the League." They are going back to the policy on which they won the General Election. The tragedy is that so much should have had to happen in the meantime.
I will call the attention of the Chancellor of the Exchequer to what the Government are, in fact, doing. I am delighted that they are doing it. The text of the Resolution on China adopted by the 104th Session of the League of Nations Council on 20th January this year invited the members of the League, particularly those concerned in the Far East, to examine, in consultation with other similarly interested Powers, the proposal made in the statement of the Chinese representative for the taking of effective measures especially to aid China. Dr. Wellington Koo's proposals appear in the statement which he made to the League Council, which was as follows:
The Chinese Government desires also that the Council invite the Member States to carry out the terms of the resolutions adopted by the Assembly and the Council of the League, particularly that of the Assembly of 6th October, 1937, providing for the grant of aid to China and for abstention from taking any action which may render China's resistance more difficult. To be more specific the Chinese Government desires that the Council recommend that the Member States should extend financial and economic assistance to China.
Just what the Government are now doing:
among other purposes for the development and reconstruction of China's South-Western Provinces and for the relief of the civilian refugees.
I think the Chancellor of the Exchequer is much too modest in coming to the House as he has to-night—too humble. He is doing something on a much bigger scale, on a world scale, which he is trying to hide from the eyes of his neighbours. I am very glad to be able to lift this transaction on to a higher level, and to make the House, and perhaps the Chancellor, realise the really fine work that he is attempting to do. At any rate

the fact remains that, apart from all the British interests involved, the Government are playing their part, willingly or otherwise, in carrying out one of the Resolutions of the Assembly and Council of the League of Nations on this subject, and on that ground alone I most wholeheartedly support the Bill.

10.47 p.m.

Mr. Boothby: It is very generous indeed of the hon. Member for East Wolverhampton (Mr. Mander) to say that he is delighted to hear that the Government, having won the last General Election on a policy of collective security, are now about to win the next General Election on the same policy.

Mr. Mander: Quite likely.

Mr. Pritt: They are quite capable of it.

Mr. Boothby: That is certainly what I hope and believe is going to happen, and I am bound to say that it is extremely generous of the hon. Member sitting where he does, and after all that he has said in the last two years, to say that he is delighted. I think the hon. Member carries his suspicion of certain actions a little too far, because he tried to prove that the Japanese were very pleased about the proposals which are now before us, and yet he almost immediately afterwards admitted that they were designed to assist the Chinese, and I am sure he will equally admit that the Chinese are very pleased too. If His Majesty's Government have succeeded in pleasing both the Japanese and the Chinese at this juncture, then we should congratulate the Government. The right hon. Member for East Edinburgh (Mr. Pethick-Lawrence) accused the Government of failing to stand up to aggression in the Far East and thereby being to some extent responsible for the present situation. I would only say that the Government, as we all admit, have not been able very effectively to stand up to aggression much nearer home, and that being the case, I think it is too much to expect that they should extend their activities to the Japanese Ocean at the present time. At the same time, as the hon. Member for East Wolverhampton said, they are coming on.
I think hon. Members on all sides of the House welcome what many of us regard as this tardy assistance given to the Chinese Republic in its great battle against the Japanese. The details of the


working out of this Bill, the method by which this Exchange Equalisation Fund will be operated, are ingenious and satisfactory. I think the Committee of Management, in particular, is one which will give confidence to the House as a whole and also give confidence in the Far East and in China. I would only express a little regret that the assistance did not come sooner and is not of a rather more substantial character. The right hon. Gentleman the Member for East Edinburgh said it was very similar to Part II of the Export Credits Bill. That statement, if I understood him aright, implied that he would rather like to see more assistance given to China than is given under this Bill. If that is the case, I entirely agree, because if we examine the situation carefully from the purely economic point of view, we shall see that we have in fact given practically no assistance whatever to China during the past three or four years. Whether you look at the Purchasing Commission or the Export Credits Guarantee Department, we have given no more to China up to date than we have got out of China, and I feel that, when it comes to the general question of stimulating the export trade and helping foreign countries, particularly those that are the victims of aggression, the Treasury ought to take a more generous view than it has done hitherto. If the Bill indicates a change of heart in that matter on the part of. the Government, they will receive the support of the whole House, and I cannot imagine that anyone would wish to divide against it.

10.52 p.m.

Mr. Ellis Smith: I beg to move, to leave out the word "now," and at the end of the Question to add the words "upon this day six months."
It is very ironical that it should fall to the lot of the Chancellor of the Exchequer to introduce the Bill. I have here a cutting from a book called "Inquest on Peace," written by"Vigilante." It states that the Chancellor of the Exchequer, at a private Press Club luncheon at Geneva, stated that Japan needed to expand, that she was doing for herself what Great Britain had done in the past, and that the trouble was that the Covenant did not allow for the dynamic forces which had carried us into India and were carrying Japan into

Manchuria. An indignant American journalist turned to his neighbour and said, "This fellow seems to be stating the Japanese case better than the Japs can do it themselves."

Sir J. Simon: Perhaps the hon. Member will allow me to say that those statements, as far as I am concerned, are untrue, and no doubt he will observe that the authority that he quotes apparently admits that he is attempting to reproduce some private conversation. I have hitherto supposed that when journalists invite people to a luncheon on the undertaking that the conversation is private, privacy is observed. The statement is untrue in any case.

Mr. Ellis Smith: It goes on to state— [Interruption.] That is so. We live in very serious times. It is because there has been too much of this kind of thing going on in the past few years that the relations between this country and other countries are not as good as they used to be. I hope to produce evidence to show that that is not the only illustration of the conduct of the Chancellor of the Exchequer in this matter of the Far Eastern situation. The Bill has for its object to facilitate the establishment of a fund to check undue fluctuations in the sterling value of the Chinese dollar. It will be impossible to check these fluctuations unless a different political and economic policy in the Far East is pursued by the Government. My hon. Friends and I are not raising this issue in any hostility towards the Chinese Government or the Chinese people. We are raising it in this way in order to express our hostility towards the Government's policy in general and, in particular, towards the policy pursued by the Chancellor of the Exchequer at Geneva, by the Minister of Health, the right hon. Gentleman the Member for Warwick and Leamington (Mr. Eden), and Sir John Pratt, whom the Chancellor of the Exchequer knew very well in 1932 and 1933.
Some people say that this Bill is not a controversial issue. A proposal to prop up private banks in this way is bound to be a controversial issue from our point of view. The Bill raises questions of what are British issues. The right hon. Member for Warwick and Leamington made a speech, which was afterwards endorsed by the Prime Minister and the Chancellor


of the Exchequer. In that speech he stated that there would be no indifference where it was clear that vital British interests were concerned. What are vital British interests? Are they security of the people, justice to the people? Are they freedom, peace, and social justice? Or are vital British interests the interests of certain capital investments? Up to now —and this is where the Chancellor of the Exchequer comes in—the policy in the Far East has been one of expediency, and it is this policy which is losing us friends throughout the world and the respect which this country used to command. Just as current events in Europe are making the Government re-examine their European policy, so, if we are to gather round us friends of peace throughout the world and to command the respect and confidence which this country used to command prior to 1932, they must reconsider their policy with regard to the Far East.
We nearly lost the loan we made to Czechoslovakia, and if there is any money to be lost, the unemployed and the old age pensioners in this country could do with some money. Before we support this proposal the House has a right to know, when it is to run the risk of using £10,000,000 of the British taxpayers' money in the way proposed, what is to be the Government's policy in the Far East. Above all, I and my hon. Friends who are associated with me would like to ask the Chancellor a number of specific questions. We would like to know why the following policy was pursued at Geneva during the past few years. A proposal was made at the Assembly of the League to carry out anti-epidemic and medical aid for the Chinese people. The Chinese delegate made an offer to place £10,000 at the disposal of the League to carry out that objective, and the right hon. Member for Warwick and Leamington and the present Minister of Health expressed their sympathy, publicly and privately, for this proposal. Afterwards Sir John Pratt got into touch with the Japanese permanent delegate at Geneva. The Japanese delegate objected to any medical assistance being given to the Chinese population. It then became Sir John Pratt's policy that the League must refuse medical assistance and confine itself to anti-epidemic work. The right hon. Member for Warwick and Leamington was suddenly called home,

and he left the present Minister of Health in charge of our policy at Geneva.
The Minister of Health's policy then became that for Treasury reasons he could not support such a policy, and later on he stated, both privately and publicly, "I have now received fresh instructions from the Prime Minister instructing me not to take a lead in this matter." Later the Minister of Health stated, and he let it be known, both privately and publicly, that his Government did not want to risk offending Japan by taking the lead in any humanitarian assistance to the Chinese people. There was no move to assist the ordinary Chinese people, but now there is to be a loan to prop up British capitalist interests in China. I want to ask if this is not a controversial issue when you have on the one hand a niggardly policy towards humanitarian proposals and on the other hand, as the result of pressure brought on the Government by vested interests, they now come forward with a proposal of this character. The moral aspects of this matter are serious, but at this late hour I do not want to take up too much time over this matter. But I want the House to note the political significance of this policy which has been pursued.
Here is another example of it. The Chinese delegate, Mr. Wellington Koo, who is acknowledged to be a fine type of man and a very generous man, suggested a resolution at Geneva which declared Japan the aggressor and called for economic sanctions. The right hon. Gentleman the Member for Warwick and Leamington, the present Minister of Health and Sir John Pratt told the Chinese that if they condemned Japan as the aggressor and called for economic sanctions, the United States of America would apply the Neutrality Act. If we are going to try to rally round us the whole of the peace-loving countries in the world in order to deal with a serious international situation, it is this kind of policy which will prevent us from doing it. What applies to individuals applies equally to nations. If a group of men over a long period of years play the game with one another it commands respect and confidence. But if individuals let first one down and then another, as a result confidence is undermined. And the same thing applies to nations as to individuals. The Chinese delegate moved this resolution, and that was the policy


of Britain at Geneva. But the Chinese delegate, much to his credit, saw the American representative and asked him what was their policy, was this true what the British representative, Sir John Pratt, was saying? The American delegate stated that there was not a word of truth in it, and he told the Chinese delegate that the statement made by Britain in regard to America was false.
The present Minister of Health then stated to the Chinese delegate, "Britain are not prepared to apply sanctions." This matter was then referred to a committee of 23. When you know that this kind of thing is going on behind the scenes, you are bound to be concerned about the policy at Geneva.
This matter having been referred to the committee of 23 the committee appointed a sub-committee of 10, and on this committee it was left to M. Litvinoff to nominate the New Zealand people's representative to serve on the sub-committee of 10. In the proceedings of the sub-committee a resolution was proposed condemning air bombing by the Japanese army. The representative of this Government, the representative of my country, moved the omission of any reference to any bombing by the Japanese. Much to the credit of the New Zealand people's Government, their representative banged the table with indignation at that proposal and said that it was monstrous and iniquitous. The British representative then withdrew his proposed Amendment, and the proceedings went on.
All this proves that the policy of this Government during the last eight years has been to do a deal with the aggressor at the expense of the victim. The people of this country have more and more seen through that policy. The current of events has made the Government change their policy, just as they have abandoned their European policy. If we are to command the respect of Australia, New Zealand, America, and other countries which have interests in the Far East, we shall have to examine our policy with regard to the Far Eastern situation.
Here is a point regarding America which is most important. I remember when Lord Baldwin was Prime Minister a few years ago putting a question to him suggesting that we should adopt a policy of improving relations between this

country and America. I knew that it was most important that all English-speaking peoples throughout the world should be welded together to defend their common interests, but I saw hon. Members over there who represent vested interests jeering and sneering at the proposal which was made at that time. We have had to carry on negotiations with America, despite the statements and manifestos issued by the Federation of British Industries, and it is to the credit of the President of the Board of Trade that he paid no regard to those statements and manifestos but put the interests of the country before those of any specific vested interest. If we are to be worthy of the support of the American people, we have to do the same thing in relation to the Far Eastern situation. Here are two extracts from American newspapers, the first from the "New York Herald-Tribune" of 6th October, and hon. Members should remember who was the representative at Geneva at that time:
After this country's experience of 1932, it does not devolve upon the United States to take the initiative in such action, but if Great Britain is now ready, as reports from Geneva would indicate, to organise such a protest, American opinion would certainly support it.
Mr. Stimson, who was the Republican Secretary of State, stated at the time of the Manchurian affair—it is most important that the people of this country should know the truth about this matter and about who was responsible for what took place—in a letter to the ''New York Times" on 7th October, that the British and United States Governments should stop shipments of all goods to Japan. The "New York Times" also supported that suggestion.

Sir J. Simon: What year was that?

Mr. Ellis Smith: The year 1932. I had a number of relatives in Australia at that time. They were forced to go out there for economic reasons during the slump of 1911. Those relatives sent me a number of letters asking me to draw the attention of the House to what was taking place in Australia. The hour is late, Mr. Speaker, or I should like to quote from the "Times" and to produce other documentary evidence to prove what I am saying. In certain parts of Australia, and in certain islands off Australia, there are some of the richest iron ore and other mineral deposits in the world. Two fairly large islands are practically composed of


iron ore. There is a State regulation that none of this iron ore shall be shipped to any country not approved by the State Government, and one of the countries which have not been approved is Japan. But along comes a London finance company and gets round this by financing the exportation through London of this iron ore to Japan. This is the kind of thing, in addition to the policy that has been pursued at Geneva, that is undermining confidence and preventing us from securing the support of America to the extent that we should.
The paramount question at this stage in our history is, What can be done to save the people from irretrievable disaster? I hope the Government will say to the world, "We have made mistakes in the past; we admit that we have adopted a policy of expediency; but from now onwards our policy is going to be based upon a plan, based upon principles that everyone can understand. We are prepared to get round a table in order to consider what is our common objective and our common interest, and in that way to build up mutual confidence between all nations that are prepared to support a policy of that kind." As a result of this, we might develop a policy of economic co-operation and a policy of diplomatic and military co-operation, and in that way build up a collective peace system, through our resources, commanding respect and confidence. But we are not going to do it by adopting a policy of expediency. The Chancellor of the Exchequer, in particular, has been responsible for that policy at Geneva, and thus for the chaos that exists very largely in the Far Eastern situation.

11.13 p.m.

Mr. Tinker: I beg to second the Amendment.
The Financial Memorandum states that we stand to guarantee £5,000,000 under certain conditions. It may be that we shall not be called upon for this sum, but we are liable, and, because of that, we have felt it necessary to draw the attention of the House to what was taking place. Many of these Bills are brought on late at night, sometimes, as we think, for the purpose of getting them through without much discussion. When the hour is late, everyone seems to be anxious to get away, and consequently speeches are curtailed; and the Government, knowing

that, bring forward matters which, if brought on earlier, would have had a more thorough examination. We want this question to receive a better examination than has been given in many cases, because we believe it is the policy of the Government that has brought us to this point. It is rather unfortunate that the Chancellor of the Exchequer should be the man to bring this matter forward. I remember four or five years ago, when he was Foreign Secretary, getting up in my place and challenging his policy over Japan and China, and when I put the question to him, the cry went up from the opposite benches, "Do you want war?" I did not want war, but I wanted a stand to be made when Japan invaded China. At that time the Government of the day looked quietly on at what was taking place, and paid no regard to the plight of China.
Now we recognise what is happening. Our trade is in danger, and something must be done to save it. One cannot object to that, but one must draw attention to what has happened in the past. The Government ought not to get away with this every time. It would be far better, when the Government find themselves in a difficulty caused by their own neglect, for them to have the courage to say quite frankly that they had made a mistake—that would be an honourable thing to do—and that they were asking the House to get them out of the difficulty. When we speak about changing the system we are told that it cannot come to pass. Hon. Members will remember a famous Debate that took place here in 1923, when Mr. Snowden and Sir Alfred Mond debated Socialism and private enterprise. Sir Alfred Mond, as he then was, said:
What is the value of private enterprise? It is this. When it fails it has got to go. That is the value of private enterprise.
To-day we find that private enterprise cannot stand up to its responsibilities. Here we have private banks, and we have to guarantee their safety. That Government have to stand behind them to the extent of £5,000,000. Probably we shall lose that; I do not know whether we shall or not. But the reason we have put down this Amendment is that the question would probably not have been examined so thoroughly if we had not done so. When he saw this Amendment on the Paper, the Chancellor would probably


say, "What are these men up to? I shall have to examine my case thoroughly." And also this Amendment might arouse a little feeling among Members of our own party, who perhaps would not have anticipated that there would be any opposition. If the House decides to grant this money, all right; but we wanted to let hon. Members know what we feel about the policy of the Government which has led us to this impasse. I hope that this will be a lesson to the Government, and that when the time comes again for courage to be shown at the outset they will show it, and not let us drift into such a position as this.

11.19 p.m.

Mr. W. Aston: I sincerely hope that the hon. Gentleman who moved the Amendment will not press it to a Division. There is nothing that would hearten the Chinese Government and the Chinese people more than for this House to pass this Bill by a unanimous vote. I do not want to follow the hon. Gentlemen opposite in their historical discursions; I am sure my right hon. Friend the Chancellor can well defend himself. But I would like to say a word in defence and protest against the attack of the hon. Member for Stoke (Mr. E. Smith) upon a most distinguished civil servant, who, by reason of his office, cannot defend himself in this House. Sir John Pratt is one of the most distinguished and liberal-minded and sympathetic officials ever associated with British policy in the Far East. Any views he expressed at Geneva must have been expressed on instructions from the Government. Surely, the attack should be made on the Government, who are here to respond, and not on a most distinguished and liberal-minded civil servant.

Mr. Davidson: Was he not also acting as adviser to the Government?

Mr. Astor: Sir John Pratt is a member of the staff of the Foreign Office, and for everything he does or says, as in the case of any other civil servant, responsibility must be taken by the Government. I deprecate this attack upon a very distinguished civil servant who has rendered great service to England in connection with Far Eastern affairs. The hon. Member for Stoke-on-Trent said something about capital investment. British in-

terests in the Far East are as much an interest of the working classes as of anybody else. He has only to ask his friends on that side of the House who sit for Lancashire constituencies about the cotton trade. Does he want a currency in which that trade is conducted to collapse? When anything comes to be done with regard to the cotton trade in the Far East hon. Gentlemen opposite who represent Lancashire constituencies are foremost in their demands that action should be taken, and it is rather ungenerous when action is being taken to pretend that it is some form of capitalist ramp. When the hon. Member asks why strong decisions were not taken before, it is well worth remembering that the Singapore Base has only recently been completed. If it had not been for delays when hon. Gentlemen opposite were in office, it might have been completed before and have enabled the British Government to look on the Far Eastern situation with rather a different eye.

Mr. Burke: Will the hon. Gentleman tell the House which representatives of Lancashire constituencies have made the allegations which he has suggested?

Mr. Astor: I said that hon. Members for Lancashire constituencies are always extremely keen to defend with courage the sale of English cotton goods in the Far East. This Bill provides for a very practical form of assistance to the Chinese Government who, by the loss of their coastal ports, have now lost the revenue from the maritime Customs, which was the basis of their financial structure. They have now to build up their economic life on a new foundation in the interior, and there could be no form of help more welcome to the Chinese Government than that which is now proposed.
His Majesty's Government have played their part by opening the road through Burma. We only hope that that road will be widened, extended and defended. Surely, it is right at this time that we should assist China; which, under the leadership of Marshal Chiang-Kai-Shek, has at last achieved a really united resistance. I was employed by the League of Nations in the Far East during the Manchurian dispute, and at that time the trouble was the disunity among the Chinese. None of the Chinese forces were backing up each other at all. One side


or the other was constantly being let down. But now the situation in China is completely changed. Formerly irreconcilable forces of the extreme right and of the extreme left are now welded into unity, and it makes it far more easy for His Majesty's Government to extend their help. The American Government have played their part by the purchase of Chinese silver, which was the best form in which they could assist, and we are helping in this way. I ask hon. Gentlemen opposite most sincerely to allow the Chinese nation to see that this House is giving this Bill a unanimous Second Reading.

11.25 p.m.

Mr. Burke: I should not have spoken had it not been for the remarks of the hon. Member for East Fulham (Mr. Astor). All that has been said from this side of the House—with which the hon. Member did not agree—on the historical survey is founded on facts. There is no doubt that the present trouble in the Far East dates from 1931, when the present Chancellor of the Exchequer was our representative at the Foreign Office. The statement of the Japanese delegate at the League of Nations that the Chancellor of the Exchequer had made the Japanese case better than Japan could have made it herself, ought to be remembered. That is the kind of thing which has led us to where we are at the present time. Unfortunately, as far as Lancashire is concerned the small amount of cotton trade which belongs to her has been diminished even further as a result of the disastrous war which is now taking place, and as a result of exchange fluctuations and changes in the price of silver. We have therefore to be very thankful, however belated it may be and however small, for any concession which may come along to help us to maintain the markets we have got.
No matter how long the war in China lasts, and it looks like going on for a considerable time, the Japanese troubles will really begin when the war is over. If in the meantime anything can be done to maintain our markets, we must be thankful for it, and it is worth while doing. I am very loth to find myself in company with hon. Members opposite in the Lobby, but if this Vote goes to a Division, I shall, for the sake of what little Lancashire trade we have got, find myself, however reluctant, in the same

Lobby as the Chancellor of the Exchequer.

11.28 p.m.

Mr. Bellenger: I rise merely to try and get a little more information from the Treasury. As the Chancellor of the Exchequer knows, I have taken some interest in this matter, even before it came before the House in the form of a Bill. I can assure the hon. Member for East Fulham (Mr. Astor) that if we were convinced that this Bill is for the purpose of ensuring that Lancashire should get a little more trade, it would have a warm welcome from these benches. I should be interested to hear from the right hon. Gentleman whether the Bill will bring one pennyworth of extra trade to Lancashire. Like my hon. Friend the Member for Stoke (Mr. E. Smith), I am concerned about the purpose of the Bill. If the purpose really is to foster trade between this country and China, then I say at the outset I give it my complete support; but I have my doubts. There are other British interests in China. The Chancellor of the Exchequer knows that the British bondholders have considerable interests there, and I have a suspicion that one of the purposes of the Bill is to ensure that the British bondholders shall receive their interest in so far as keeping up the exchange value of the Chinese dollar will contribute to that. I ask the right hon. Gentleman to give us an assurance, if he can, that the main purpose of the Bill is to foster Chinese-British trade.

Sir J. Simon: I can give the hon. Member the assurance that that is the purpose of the Bill.

Mr. Bellenger: The right hon. Member for East Edinburgh (Mr. Pethick-Lawrence) mentioned the Export Credits Guarantee Fund. If we want to increase and foster Chinese-British trade I think that would have been the best way to have done it, not by creating another little equalisation fund similar to our own very large one. As to the effect of the Bill on British trade, the right hon. Gentleman gave us some figures, but he did not complete them. He told us that in 1875, 90 per cent. of the imports into China went through Hong Kong and British possessions; that 60 per cent. of Chinese exports went through the same door, and that in 1936 a substantial amount of British trade, imports and exports, followed the same avenue. But he


did not tell us the percentage. It would have been possible to see how far this £5,000,000 guarantee, which the Treasury may be called upon to implement, will affect our trade at the present time, if he had done so.
I want to ask, what is going to be the position with regard to the North China area, which I imagine is capable of supplying a large volume of Chinese-British trade? I believe it is common knowledge that in that large area the Japanese Government have instituted through their puppet Government a federal Chinese dollar which has a value of 1s. 2d. or thereabouts. The trade which is being done in that area with foreign firms is done on the basis of the present currency value of the Chinese dollar— namely, 8d. or 8½d., but as all trade is going through Japanese sources in North China, not at an exchange value of 8d. or 8½d. but at a value of 1s. 2d., how is that going to affect British trade?
Will the Bill have any influence whatever on the volume of trade going through North China? It would have been interesting to have heard what is the balance of interest between the bonds outstanding and the volume of trade which even now is going on between China and this country. I do not think we can assess the position until we know the volume of this trade. I asked a question about the Tripartite Agreement. Do I understand that the purpose of the Bill is to keep the exchange value of the Chinese dollar at 8 of 8½d.? Is it to work in the same manner as our own Equalisation Account, which is for the purpose of levelling out fluctuations in the value of sterling? Will this amount of £10,000,000 operate in a similar manner, and as regards the Tripartite Agreement between France, America and this country regarding our own currency, is there to be any consultation with America and France as to the exchange value of the Chinese dollar, because they also are interested, perhaps as much, or nearly as much, as we are in that question? It is interesting to note that the United States have made their contribution by way of purchasing silver in China; at any rate, they do get some substantial commodity for the United States dollars that they advance to purchase the silver. All we shall get will be Chinese currency.
There are one or two questions on the Bill that I should like to ask, and I hope the right hon. Gentleman, if he is not able to answer them to-night, will take another opportunity of giving an answer. From where will the committee operate? Is the committee which is to be set up going to have headquarters in London and to operate mainly from London? I notice in the White Paper that the Chinese dollars purchased with sterling belonging to the fund will be held in Chinese legal tender in Shanghai or Hong Kong, of course for the account of the fund. Will the whole of the £10,000,000 be subscribed immediately after the passing of the Bill, or will certain sums of money be provided as they are required to purchase Chinese dollars? If so—if, in other words, only a portion of the £10,000,000 will be subscribed immediately—will interest at 2¾ per cent. be paid on the amount, as it were, of paid-up capital?
What is to be the control of the costs of operating this fund? Is the Treasury to have any control other than reports which will be given to them by the British expert who is to be appointed with their approval? After all, British taxpayers' money may be required in certain cases to pay for any losses which accrue in this fund. Therefore, it is only reasonable— I believe the hon. Member for Gravesend (Sir I. Albery) mentioned this point, although perhaps in a different way—that the British taxpayers should know something about the operations of this account. Perhaps the right hon. Gentleman will say whether any direct Treasury control is going to be exercised and whether the accounts are going to be lodged with the Treasury either on winding up the account or earlier. I submit that the House ought not to allow matters of this nature, and a comparatively new principle, even at this late hour of the night, merely to pass with little discussion because one Front Bench agrees with the other Front Bench that this is a perfectly legitimate Bill. I think that hon. Members, on whatever side of the House they may sit, ought to remember that they are responsible, although naturally in a smaller degree than the Treasury, for the manner in which the taxpayers' funds are disposed of.

Mr. Boothby: Sez you.

Mr. Bellenger: The hon. Member for East Aberdeen (Mr. Boothby) may take that remark of mine in a cynical manner. I mean it sincerely. The hon. Member, during his period in this House, has probably given expression to the same views on various occasions. Therefore, it ill becomes him to suggest, because those views come from these benches, that they are not just as sincere as similar views which probably he has expressed on previous occasions.

Mr. Boothby: It was only the hon. Member's reluctance to break with precedent, and his terror of doing anything which is out of the ordinary, that amused me.

Mr. Bellenger: I do not know what justification the hon. Member has for that remark. I do not think that I have ever given any indication that I am afraid to break with precedent, or, if necesary, to observe it on occasions when I think it should be observed. A truism is still a truism, from whatever quarter of the House it comes. I hope the hon. Gentleman will agree with me in that remark at any rate. I am sorry to keep the House so long at this late hour, but the right hon. Gentleman has a disarming manner in presenting this and other issues relating to foreign affairs, and perhaps that is a reason why we should be all the more suspicious when he is presenting legislation of this kind to the House. I hope the Financial Secretary will be able to answer our questions.

11.41 p.m.

Mr. Malcolm MacMillan: Before proceeding to certain criticisms of the Bill there is one point which I would like the Chancellor of the Exchequer to explain to the House. Clause 1 says that the Treasury may guarantee the payment to any bank of interest on the amount of the contribution made by the bank to the fund but there is no definition in the Bill of what the interest is to be. It is mentioned in the White Paper but we are not passing the White Paper. We are supposed to pass the Bill and I cannot understand how such an omission from the Bill could have taken place accidentally. I do not think any hon. Member could conscientiously support a Bill which guarantees interest without any definition or limitation. We cannot subscribe to that which we are unable to

describe and we cannot guarantee what has not been denned. This omission is so serious that I suggest that the Bill should be withdrawn and redrafted and submitted to the House at another time if it must be submitted at all.
I wish the right hon. Gentleman to treat this matter seriously. I am sure that the hon. Member for East Aberdeen (Mr. Boothby) as an Aberdonian would be very careful himself and I must say that I have admired the generosity shown to-night not only by the hon. Member as an Aberdonian, but by other hon. Members opposite. At the same time I have a feeling that that generosity would not have been forthcoming for even better causes than this, when the hon. Member himself shared a certain amount of responsibility in connection with the Treasury. The only other support for the Bill from hon. Members opposite came from the hon. Member for East Fulham (Mr. Astor), who expressed some noble sentiments about the working man. I take it that he was considering the interests of the black-coated working men opposite, or the black-coated opposites of working men whom he represents.
Apart from the important objection to the drafting of the Bill which I have mentioned and which may not be merely an accident, there are other objections. I object to the Government doing for private interests what they would not do in the cause of the Chinese people and of humanity and of preventing Japanese aggression; I object to the Bill because this money is very much needed here in many good causes—causes just as good as the promotion of better trade relations with China, if that is the real reason for the Bill. I object to it because I believe it is not founded on any basis of ethical principle and because it involves the risk of a loss of at least £5,000,000 to the State, while any gain from it is hypothetical. I object to it because I regard it as a patch upon the effects of a disastrous policy initiated and to a large extent, certainly, carried out by the right hon. Gentleman himself. I object to risking the loss of £5,000,000 and giving a loan of £10,000,000 in order to soothe the conscience of the right hon. Gentleman, and I cannot help feeling that to a large extent that is one purpose of it.
These objections are fundamental ones, but the Bill itself is loose in important


parts. It does nothing to get rid of the causes of the very thing it is supposed to do—to check undue fluctuations in the sterling value of the Chinese dollar. We have been discussing the effects of the policy which made this Bill necessary. These undue fluctuations are caused by a deliberate attack by the Japanese Government upon the Chinese dollar. Our Government know that perfectly well, and should make representations to those who are causing the situation which this Bill, at the expense of the British taxpayer, is allegedly designed to mend. Then the committee which is to administer this money is almost entirely made up of what I should call bank nominees. The Chinese bank is to appoint two members, other banks will appoint one each, and one member, a suitably qualified British expert, will be appointed by the Chinese Government in agreement with the Treasury and with the approval of the British banks. No direct authority to any one of them comes from the Treasury; they must have the approval of these private banks, and all the administration is being done by the nominees of these banks. The committee will determine the "day to day policy" to be pursued. I should have thought that the Government would have found from among their own supporters plenty of representatives accustomed to a day to day policy. Certainly the Government ought to have better representation in the administration of State funds.
From Clause 5, studied in conjunction with the White Paper, we find that either party may determine the arrangement at any time by giving seven days' notice to the other parties. Apparently this power is unrelated to the state of the fund at any time. That is rather a dangerous Clause, and surely there ought to be some limitation there. In essence it amounts to this, that if there is a profit the Treasury may get a hypothetical and doubtful amount of it, but that if there is a loss the State must make it good to the tune of £5,000,000. As I have said these fluctuations of currency are taking place because of the war and the Japanese policy of a deliberate attack upon the stability of the Chinese currency, and the way to stop them is to make representations to those who are causing them. We have paid very dearly because we did not attempt to stop the

damage, which later we spent millions of pounds to mend, in Czecho-Slovakia. Are we being asked to do the same thing in Japan? Our foreign policy has led us into the position of having to loosen the purse-strings of the British Treasury. For these reasons, and because of the fact that there are many good causes to which we could apply the money more usefully in this country, I believe we should oppose the Bill and, if it is taken to a Division, I shall vote against it.

11.51 p.m.

Mr. Pritt: While this sum is very large in some ways, in relation to some things, it is a very small figure in the world of what I might call currency wars. If, as many people suspect, the fluctuations of the dollar are part of ordinary Japanese manoeuvres and machinery—it certainly would not be the worst or most striking thing the Japanese have done if it were —if we inform the Japanese that should they attempt to carry on a further currency war we will spend £5,000,000 in trying to stop them, and if they are really desirous of wasting £5,000,000 of our money, firstly how long will it take the Japanese to smash this quite tiny effort and, secondly, is any precaution being taken in the way of preparation for a counter-offensive in seeing that the Japanese do not succeed in reproducing the situation that exists already, with the difference that we shall look fools and be £5,000,000 poorer?
We on this side naturally suspect most Bills brought in by this Government and the fact that they are to support someone's currency does not make us any less suspicious. The fact that on the rare occasions when we have not suspected their legislation we have discovered in a short time what childish fools we were not to suspect it, because there was some dirty trick at the back of it, makes us still further suspicious. We are made suspicious again by the fact that the Chancellor of the Exchequer assures us that the Bill is designed simply to support British trade. It has, unfortunately, become in the last year or two the ordinary commonplace of politics that, whereas Governments used in the past to lie a little, and take the trouble to conceal the lie, the ordinary method of this Government in foreign and home policy is to lie with a sort of blatent inefficiency which does not even take the trouble to


conceal the tact that it is a lie. The only statesman who has boasted of his efficiency in this respect in this Chamber is Lord Baldwin. Like other statesmen and politicians, they have employed the same technique with such regularity that they have almost become efficient in the inefficiency of it.
Therefore some of us feel very anxious as to what the real game is. We do not feel any the less anxious because there is almost a sort of Greek tragedy of appropriateness in having British trade with China supported from the mouth of the right hon. Gentleman. I suppose, whatever he did or did not say, publicly or privately, at Geneva, and whether or not the Japanese were right in saying, as they are reported to have said, that he had put their case better than they could have put it themselves—he has built up a considerable reputation for putting other people's cases better than they could themselves—it is a notorious fact that one of the reasons why the right hon. Gentleman committed this country to support Japanese aggression in Manchuria in 1932 is that the Japanese gave the assurance that they would preserve the open door to British trade when they had duly swallowed Manchuria.
One was confronted then, as one is confronted almost every day nowadays, with the old problem. Here is an assertion, say, by the Japanese that they do not intend to injure British interests. Any person who really believed that assertion and attempted to take part in public life would in any intelligent community be removed to a mental home. There is the Government solemnly asserting that they believe init and committing the country to losses of hundreds of millions of trade by so doing. One indeed wonders whether they were simple enough to believe it or whether they were agreeing to believe it because it saved them from opposing a reactionary Power by some course which was repugnant to their own interests and instincts. Whatever it is, one naturally suspects it very readily. We have from the hon. Member for East Fulham (Mr. W. Astor), carrying the authority of the reflected glory of the newspaper of one of the Government Departments, an explanation of the Government's behaviour in Manchuria.
Always hitherto, supporters of the Government have explained that really every-

thing that they did in Manchuria and in lots of other places beginning with "M," was, of course, the best possible thing they could do in the best of all possible worlds, and "there was no ulterior motive. Now in steps the hon. Gentleman and says," If only the Singapore Base had been ready we should have behaved entirely differently. "What does that mean? It means that all the declarations of 1931, 1932 and 1933 were a pack of falsehoods and that we were not refraining from supporting China and opposing Japan in the interests of British trade. The Government case put by this very distinguished representative, or half-representative, of the Government is simply this —because we had not got ourselves in a proper position to be able to fight we did not fight, and we were covering it up by—

Mr. Astor: I did not try to make a case on those lines. I was merely saying that that was perhaps a contributory factor for which the hon. Gentlemen opposite when they were in the Government might have had some responsibility.

Mr. Pritt: If the hon. Gentleman gets somebody to read the OFFICIAL REPORT to him he will not find the words "perhaps," "contributory" or "factor" in his speech. All he is doing, even if he does succeed in finding those words, is to alter his first explanation, which is that the Government did the wrong thing because they were not strong enough to do the right thing. I am sure that with these two explanations to choose from the Government will be grateful to the hon. Member and will in due course put him on the Front Bench side by side with the gentlemen who get into trouble for saying that the Government feel morally bound to stand by their word when everybody knows that the Government do not feel morally bound to do anything of the kind. I would like to see this Bill pass because one is often confronted with a Bill that comes too late and is too small and is introduced with some thoroughly bad motive, but which does good by accident. While deeply suspicious of it, I feel compelled to support it.

11.59 p m.

Mr. Davidson: I regret having to make what remarks I have to make on this question at such a late hour. I do not participate in this discussion either as a


financial expert or as an expert on foreign policy. Therefore, unlike the Chancellor of the Exchequer, I cannot claim to be bringing in a generous Measure in order to make up for a bad foreign policy in the past. I therefore think that those who are criticising Opposition Members for criticising this Bill should try to realise that it is the duty of the Opposition to do all they possibly can to point out the faults and the failings of any Government and to bring forward constructive proposals in order to strengthen any legislation that the Government bring in. I think the speech of my hon. Friend the Member for Stoke (Mr. E. Smith) was a remarkable speech inasmuch as it fully examined the past faults of the Government's policy from which this particular Bill emanates. I know that the right hon. and gallant Gentleman who is to reply has no objection to giving the House a very full and unqualified reply no matter what hour it may be. He has had considerable experience in dealing with these important Government matters at very late hours of the night and very early hours of the morning—questions that ought to be given ample scope for discussion at a reasonable hour. I was interested in hearing the pleas put before the Committee by Government spokes men. The hon. Member for Fulham, East (Mr. Astor) in a nice, quite maiden speech—

Mr. Astor: Maiden?

Mr. Davidson: I wanted the hon. Member to interrupt me so that I could explain to the House that if it was not a maiden speech it was delivered in a very maidenly manner. The hon. Gentleman stated that this was a Bill to help the Chinese people. In 1939 the British Government are bringing in a £5,000,000 Bill to help the Chinese people because the Chinese people are being tramped on, mutilated and murdered by Japanese oppressors. The hon. Gentleman should have finished his statement and appealed to our sentiments on this side, saying that this was a great humanitarian act. But in the next sentence he said it would also help British industry, and so hon. Members on this side of the House should not criticise the Bill or vote against it. I am definitely sure the hon. Member and his friends are much more interested in British industry than in the suffering of the Chinese people.
The hon. Member must realise that we have a right, as representatives. of the people, to criticise and examine very carefully any expenditure that may be made. We also have that right as an Opposition, in view of the fact that we have asked the Government for years to undertake some measure of support to the stricken people. The hon. Member and his friends have said that if you assist any oppressed people, and give those who are being hurt by dictators financial assistance, if you do not adopt a policy of non-intervention, then you are warmongers. The Fascist states may say they do not like your policy and will go to war with Great Britain and we will be involved in a horrible world catastrophe. Those are the continual arguments when we ask for something to be done to assist the stricken Chinese people after bombing raids, and when we said the fight of the Chinese was as much a fight for British interests as Chinese interests we were described as sentimentalists.
Now the Chancellor of the Exchequer and his followers come forward and say: "Please pass this Bill. This is a good Government in assisting oppressed people. We are assisting Chinese industry. Do recognise our great generosity; pass this Bill and forget that it was the same Chancellor of the Exchequer who, as Foreign Secretary, initiated these atrocities in China. He gave Japanese aggression the support it desired." Because of the folly of the present Chancellor of the Exchequer we are now asked to assist the Chinese people by this Measure.
I would refer the right hon. Gentleman to an article in "The Sunday Express," of 15th August, dealing with his attitude to the Chinese situation. It was sent to the paper by the right hon. Member for Carnarvon Boroughs (Mr. Lloyd George), who used to be more closely associated with the Chancellor of the Exchequer before one of them stood by his principles and the other went for power and position. The right hon. Gentleman finishes the article by saying:
When one bears in mind that Britain was also afflicted with the most ineffective Foreign Secretary that has ever paralysed its influence, it is easy to understand that Japan paid no heed to pious admonitions, whether they emanated from London or elsewhere.
He went on to refer to the American Secretary of State. I would like to know


whether the Bill has been placed before us with the knowledge of our American and French friends, whether some general action has been taken and whether the right hon. Gentleman can assure the House that we shall be willing not only to do something for the Chinese people and industry but something to hamper Fascist aggression by Japan. The Government ought to come right out and say so. They ought to have got over their scare of the Fascist dictators.
I understand that the Government have a new policy now, and that the Labour Opposition are going to be asked to rally behind the Government in a Council of State to show firmness to the dictators. Now that the War Secretary has provided us with ample means in the shape of guns, the Royal Air Force is of good standing and the British Navy is an impregnable and undefeatable force, we are to be rallied to make a firm stand. I ask the Government's spokesmen to state candidly that they are now taking steps against aggression in China. It will assist the Chinese people and the British nation if he will give us a definite statement.
With regard to collaboration in 1932, the article to which I have referred states that the American Secretary of State suggested joint action, and goes on
For this the right hon. Gentleman "—
who is now Chancellor of the Exchequer—
was not ready. In fact, he was never ready.
That extract deals with collaboration with America. Is the Government's present step being taken in collaboration with France and America, whose interests are affected materially by Japanese aggression in China? No matter how generously or smoothly—I think that word is more appropriate to the Chancellor of the Exchequer than any other word in the dictionary—they may put their proposals, they must realise that their proposals carry out a policy that we have advocated for years, and they ought at least to have the manliness to admit that they are at last recognising that the Opposition were right in their criticisms and suggestions, and to extend some thanks to the Opposition for having guided them, even after many years, on to the right track in foreign policy and humanitarian principles.

12.11 a.m.

The Financial Secretary to the Treasury (Captain Euan Wallace): I should like to begin by apologising to the right hon. Gentleman the Member for East Edinburgh (Mr. Pethick-Lawrence) for any defects in the grammar of the White Paper, and to tell him that the passage to which he took exception was put in by me and not by a civil servant. I hope the House will permit my right hon. Friend and myself to derive rather more satisfaction from the adherence of the right hon. Gentleman, of the representative of the Liberal party, and of hon. Members on our own side of the House, to the terms of the Bill, than will be necessary to offset any chagrin we may feel at the very enjoyable filibuster which has been carried on by hon. Members on the back benches opposite. If it is their pleasure, I shall be delighted to sit up as long as they desire and answer their questions as well as I can.
The right hon. Gentleman the Member for East Edinburgh, in his otherwise admirable speech, made one contradiction to which I should like to call attention. While he ended his speech by saying that the Measure, excellent as it was, did not go far enough, he began with the generous and sensible admission that a sum of £10,000,000 would be extremely effective for the purpose we have in mind; and he did a sum, perhaps on paper beforehand, which I had not time to do, and said that this meant the equivalent of 300,000,000 Chinese dollars. He drew attention also to the fact that the Chinese currency is not tottering; it has been stable for some time, and has been very well supported by the Chinese Government. I shall return to the right hon. Gentleman later, but now, without attempting to confute the wild allegations which have been made by some hon. Members with regard to past history, I will answer as shortly as I can the specific questions which have been very properly addressed to the Treasury Bench from all parts of the House.
My hon. Friend the Member for Gravesend (Sir I. Albery) asked whether we should get full information with regard to possible losses on the fund, and whether, if there were a loss, the whole of the circumstances leading up to it would eventually be passed in review by the Comptroller and Auditor-General. The answer is in the affirmative. We


have the right to get all the information, and it will be supplied in such a form that if, unfortunately, we make a loss, it can be examined by the Comptroller and Auditor-General and reported upon in the normal manner.

Mr. Pethick-Lawrence: I think the hon. Member asked a little more than that. I do not think he said only "at the end, when it is being wound up." He asked whether the fund itself will be audited annually by the Comptroller and Auditor-General.

Captain Wallace: There certainly will be periodic reports. I would not like to commit myself by saying that the accounts of the fund would be made public annually. I think they would be presented in much the same way as our Exchange Equalisation Fund is presented to the Comptroller and Auditor-General.

Mr. Pethick-Lawrence: The right hon. Gentleman first gave an undertaking that it would be done every year, and then that it would be done in the same way as our Exchange Equalisation Fund. Those statements cannot both be correct. Our Exchange Equalisation Fund is audited by the Comptroller and Auditor-General, and is brought in retrospect before the Public Accounts Committee. We are entitled to know whether that is really done in regard to this fund or not.

Captain Wallace: It will be audited every year. I apologise if I have misled hon. Members, but I am very anxious they should not get mixed up on the question of the fund being audited and of its being made public. The hon. Member for East Wolverhampton (Mr. Mander), on behalf of the Liberal Opposition, welcomed the Measure, but was rather inclined, as is the custom with him and his hon. Friends, to look a gift horse in the mouth. Actually he was effectively demolished by my hon. Friend the Member for East Aberdeen (Mr. Boothby), who pointed out that, as a result of the passing of this Bill, all parties concerned would derive benefit; and he paid the arrangements the tribute of describing them as being both ingenious and satisfactory.
Now we come to the hon. Member for Stoke (Mr. E. Smith) and the hon. Member for Leigh (Mr. Tinker). I have,' if I may say so, very seldom come across

a more suspicious Member of this House than the hon. member for Stoke. The hon. Member for Leigh (Mr. Tinker) made a gallant effort to follow him in being equally suspicious, but, before the end of his speech, his good nature got the better of him. He could not himself believe that this was such a Machiavellian design as he wanted us to think. This is not a proposal to prop up private banks, as the hon. Member for Stoke suggested, and the reason we are associating these banks in the management of this fund is that, between them, they are able to provide an immense amount of ability and experience, and they have the extra merit of being on the spot. Whatever we may or may not have done in the past to help the Chinese, there is no doubt that this Bill will be a distinct help to them.
The hon. Member for Leigh referred to a very famous Debate between the late Sir Alfred Mond and the late Lord Snowden on the question of Socialism and private enterprise. I think he rather twisted the argument of the late Sir Alfred Mond, because what Sir Alfred said, if I remember rightly, was that, if you nationalise all kinds of enterprise and it goes wrong, the taxpayer has to stand the racket, but if, on the other hand, you leave enterprise to function by itself and it goes wrong, the investor has to stand the racket. I should also like to assure the hon. Member for Leigh (Mr. Tinker) that he is quite wrong in thinking that we deliberately bring this kind of Measure on late at night. My right hon. Friend and I had every hope that we should have got this Measure on about nine o'clock and have had it finished by ten o'clock.

Mr. Davidson: As far as I can speak for members of the Opposition, we do not blame the responsible Minister for the bad arrangement but the Chief Whip.

Captain Wallace: In that case the hon. Member is barking up the wrong tree. In no Government Department are we so unwise as to take the chance of a Measure coming on late at night and not prepare our case. We have to know our case anyway whether the Opposition intend to probe it to the very bottom or not.
I should like to congratulate my hon. Friend the Member for East Fulham (Mr. Astor) on a speech which came in very well after the two speeches which preceded it, and to echo his hope that this Bill will, in spite of the Amendment on


the Paper, get a unanimous Second Reading. He was perfectly right in saying that it would have a considerable psychological effect in China, and I was particularly glad that my hon. Friend took up the cudgels on behalf of a very distinguished civil servant, who was mentioned by name. It would be a great pity if we in this House got into the habit of bringing into the Debates here the names of civil servants who cannot defend themselves. The hon. Member who attacked Sir John Pratt really could not have chosen a worse man to attack, for, if the situation had been such that Sir John Pratt could have replied, I think the hon. Member would have caught a tartar. As I expected, the hon. Gentleman the Member for Burnley (Mr. Burke), speaking with full knowledge of what this Bill is intended to do and what it is likely to do, came out in support of it along with his own Front Bench.
That brings me now to the hon. Gentleman the Member for Bassetlaw (Mr. Bellenger), who was the most persistent and inquisitive of my questioners. His first question, Will this Bill bring trade to Lancashire? was very completely and precisely answered by the hon. Gentleman who followed him. If he really wants to be assured that the object of the Bill is what it says and not some mysterious and sinister design to assist bondholders, and if these are the conditions on which alone he is willing to support it, I give him my word that he can support it with a perfectly clear conscience. The fact that this Bill was not introduced to help the bondholders is shown, if evidence were needed, by the fact that we did not, before making these arrangements, first ask the Chinese to come to some agreement with the bondholders.

Mr. Bellenger: Is it expected that one of the effects will be some arrangement being come to by them, with the bondholders?

Captain Wallace: Obviously anything that increases or promotes trade between the two countries may make it easier for the Chinese Government to fulfil their obligations. [Interruption.] The hon. Member says "Ah."

Mr. Bellenger: I did not say "Ah."

Captain Wallace: No, it was the hon. Gentleman behind him.

Mr. Malcolm MacMillan: I said "Oh."

Captain Wallace: One might imagine from that expression that the hon. Member would really prefer a default on the obligations to the bondholders. Does he realise that the only effect would be to reduce the purchasing power of these people, perhaps in this country, and possibly for them to dismiss people from their employment. The hon. Member asked me why our percentage of trade with China had gone down. The answer is that we had a long start there, and that a great many other nations, since 1875, came and took their share of that trade.

Mr. Bellenger: I think I asked not why it had gone down but to what it had gone down.

Mr. Pritt: What is the figure?

Captain Wallace: I cannot give the percentage, but if the hon. Member wants it I expect I can let him have it. He referred also to North China, where it is true that the Japanese have attempted, since 10th March, to introduce in certain towns an arrangement by which the legal tender money of China is declared to be worthless and all foreign exchange derived from exports has to be surrendered, in return for Japanese notes sponsored by the Japanese Federated Reserve Bank, of which the official rate of exchange is 1s. 2d. for the dollar. His Majesty's Government have already protested that such arrangements are entirely inconsistent with the Japanese promise to respect British interests in North China. It is perhaps rather more comforting to know that those best qualified to judge are inclined to think that this Japanese arrangement will in practice break down. If an attempt is made to alter the rate of the Chinese dollar from 8½d. to 1s. 2d. the immediate result seems certain to be a complete cessation of export trade. The Chinese legal tender currency will continue to circulate, except in those towns and along those railways where the Japanese have made their control effective. The Japanese plan relates to North China only, and not to the whole country occupied by Japanese troops, and not to Central China at all.
As regards the place of operation of this fund it will be Hong Kong. The £10,000,000 will be subscribed at once,


and that answers the point about interest. So far as the money is not required for the purchase of Chinese dollars and is invested in sterling here, the interest will be available, and will go some part of the way towards helping the Chinese banks to pay the interest due to the British banks. The hon. Member for the Western Isles (Mr. M. MacMillan) asked me why the rate of interest had been omitted from the Bill and put only into the White Paper. The answer is that the interest is at the rate of 2¾ per cent. at the present moment. If the agreement were renewed after a year or more the rate of interest might be altered; it might go up or it might go down. That is why we have followed the normal practice of simply giving the Treasury authority to fix the interest. If the hon. Gentleman knew as much about the Treasury as I do I think he could rest assured that they would not pay more interest than they have to do.

Mr. Malcolm MacMillan: But does it not remain a fact that there is no limit to the amount which can be paid at the end of 12 months? We have a right to be suspicious.

Captain Wallace: I suppose that if the Treasury went absolutely mad they could pay 20 per cent. But we have conducted our business fairly successfully for hundreds of years on the supposition that the Treasury will not go mad.

Mr. Silverman: But is there any reason why the amount of interest to be paid should be left absolutely at large? Is there any particular reason why some upward limit should not be inserted in the Bill?

Captain Wallace: This agreement may go on for a number of years and we do not want to have to come back to the House every time. The hon. Gentleman also asked about the seven days' notice. There again there seems to be some suspicion that because seven days' notice only was required to terminate the agreement, somebody—I suppose the two Chinese banks—were going to steal a march on the simple British. Perhaps the hon. Member has not appreciated that all the four banks and the British Treasury are out to help each other and are all in the same boat, and therefore that one side has no special motive to

denounce the agreement at any particular moment. The hon. Member for Hammersmith, North (Mr. Pritt) asked me, in effect, how long this fund would last. As his right hon. Friend the Member for East Edinburgh (Mr. Pethick-Lawrence) said, this fund is a very substantial one. It is by no means a small sum. It is not being pushed into the breach to buttress a tottering currency. The Chinese have managed to keep their dollar stable for a number of months past, and I think that the whole House will appreciate that it is just as much, if not more to the interest of the Chinese themselves to keep their currency stable as it is for us.

Mr. Pritt: I did not ask that question. I asked two questions.

Captain Wallace: That is the answer to one of them.

Mr. Pritt: I asked how long would it last if the Japanese chose to make an attack on it, and whether precautions are being thought out and taken to rebut a determined Japanese assault.

Captain Wallace: That is the very reason for the exchange fund.

Mr. Pritt: That is no reason why I should not be told what is to be done. There is first an attempt to stop normal fluctuations without hostile attack, and, secondly, precautions which may have to be taken if a deliberately hostile attack is launched.

Captain Wallace: I do not agree with the hon. and learned Member. I always understood that the object of an exchange fund was to counteract hostile attack, and that, I imagine, is what this fund is for. But I do not think there is any sense in making advance plans for various hypothetical circumstances. The hon. Member for Maryhill (Mr. Davidson) referred again to a question which, if I may say so with respect, had been raised before he came into the House. It is the question as to whether this particular agreement was similar to the Tri-partite Agreement between ourselves, the United States of America, and France, about which the House has often heard so much, and the Chancellor of the Exchequer replied that that was not the case. This particular operation which we are asking the House to approve in the


Second Reading of this Bill is our contribution to help Chinese currency. The United States of America have made their contribution and have been making it by the purchase of silver. That is not to say that we do not keep the United States of America and France closely informed as to what we intend to do, and the House will be able to deduce from recent statements of policy that our objects are the same. As the right hon. Gentleman the Member for East Edinburgh (Mr. Pethick-Lawrence) said in asking his own followers to give a Second Reading to the Bill, the object of this Bill is to keep up the Chinese dollar in terms of the £ and to prevent those fluctuations which are so disastrous to trade. It will, of course, have the merit of enabling the Chinese people to buy more in this country, which will help them and will help us. I do not think it would be fair to describe this Bill as an anti-Japanese Bill. This Bill is a pro-Chinese Bill and a pro-British Bill. I believe that when all is said and done the greatest beneficiaries of this Measure, if the House passes it, will be the ordinary people of China themselves in their millions.

Bill committed to a Committee of the Whole House for To-morrow — [Captain Water house.]

CHINA (CURRENCY STABILISATION) [MONEY]

Considered in Commitee under Standing Order No, 6q.

[Sir DENNIS HERBERT in the Chair.]

Resolved,
That, for the purpose of any Act of the present Session to facilitate the establishment of a fund to check undue fluctuations in the sterling value of the Chinese dollar, it is expedient to authorise—

(a) the issue out of the Consolidated Fund of —

(i) any sums, not exceeding in the aggregate five million pounds, required by the Treasury to reimburse to certain banks any amount by which the sums received by them on the winding-up of the said fund are shown to fall snort of the amount of the contribution made by them to the said fund; and
(ii) any sums required by the Treasury for the fulfilment of any guarantee of the

payment to any such bank of interest on the amount of the contribution made by the bank to the said fund; and

(b) the payment into the Exchequer of any sums receivable by the Treasury on the winding-up of the said fund— (King's Recommendation signified) — [Captain Wallace]

Resolution to be reported To-morrow.

PUBLIC TRUSTEE (GENERAL DEPOSIT FUND) BILL.

Order for Second Reading read.

12.39 a.m.

The Attorney-General (Sir Donald Somervell): I beg to more, "That the Bill be now read a Second time."
I hope that this is a Bill which will commend itself to the House. It is one of those Bills which explains its history and purpose in the Preamble. But in case there are some hon. Members who have not had time to study the Preamble, I will make a short statement explaining the point and the purpose of the Bill. In the administration of any trust there may be from time to time cash balances which are existing in that form for a short period of time pending investment, reinvestment or distribution. In the case of an ordinary single trust the balance will be put on current account, or possibly on deposit. In the case of the Public Trustee, who deals with thousands of trusts, the aggregate at any given moment of such cash balances is large, and it appeared about 20 years ago that there was in the aggregate of these balances a continuous sum which could be invested at higher rates of interest than could be obtained on deposit at a bank. For some 20 years that available balance and the aggregate amount of those fnuds has, in fact, been so invested. The trusts have benefited in that, instead of getting as one used to get, some 2 to 2½per cent. on deposit at a bank, the trusts have in fact received some 4 per cent. on those cash balances. The trusts were credited with the round sum of interest the fractional amounts above that sum going as management funds to the Public Trustee for the purposes of the fund. Certain small capital accretions went also to that purpose.
In 1936, owing to the general upward movement of Government gilt-edged secu-


rities, there was a large capital appreciation—some £117,000. Throughout this period from 1918 onwards, if the movement of gilt-edged securities had been downwards instead of upwards, the Treasury would have borne the loss, that is, the various trusts were not interested in the capital appreciation or depreciation of those investments, but they were guaranteed their money and they got their advantage on the higher rates. In those circumstances it seems to us reasonable that that capital sum should go to the Treasury who would have borne the loss if the movement had been the other way. This actual business, which has been to the advantage of everyone concerned, of aggregating these balances and investing the available amount requires regularisation. It is one of those sensible things which has not been in the letter of the law, and attention was drawn to the matter—as members of the Public Accounts Committee know—sometwo years ago, and the members of the Public Accounts Committee expressed the view that the matter should be regularised. This Bill seeks to regularise the matter in the future, I hope on lines which meet with the approval of the Public Accounts Committee and also Members of the House.

12.43 a.m.

Mr. Pethick-Lawrence: This is rather a formidable Bill to look at, and there are a good number of repetitions of the word "whereas." I am afraid that any one who looked at this Bill might think the British Exchequer was a nefarious organisation and would come to the conclusion that we are now proposing to purloin a very large sum belonging to persons unable to resist the will of Parliament. But I believe that impression would be quite erroneous. As present acting-chairman of the Public Accounts Committee I can say that the Committee did go into this matter with very great care. They came to the conclusion that there were no beneficiaries who had any claim whatever to this sum of money, and the only person, therefore, who could possibly have it was the British Exchequer, and they thought it necessary for the matter to be regularised. I do not know that they realised the complications of this Bill, but if this is the simplest way it can be done it meets with the good will of the Public Accounts Committee and

it will, I am sure, be agreed that that body would not pass as legitimate anything that would in effect be depriving anybody of their just rights. Therefore, I ask my friends on these benches to support the Bill.

12.45 a.m.

Mr. Silverman: I do not desire to invite the House to oppose the Second Reading, but I think that perhaps it would be worth while to point out that what the Treasury are doing in this Bill is to take an advantage to itself which a private trustee would not be entitled to do. I think I am not mistaken in suggesting that if a trustee chooses to invest funds in a security which is not a trustee security then, if a capital loss is sustained he is liable to make it good, whereas if the result of the unauthorised investment is a capital appreciation that capital appreciation belongs to his beneficiary. I think that is the law with regard to private trustees, and it is a very sound law, too. Obviously it has its advantages in keeping trustees to the straight and narrow path.
Here we are departing from that principle. We are passing legislation to exempt ourselves when we act as trustees from the operation of the general law. We are permitting ourselves to make an unauthorised investment. It is quite true that the revenue profit belongs to the beneficiary, and if there had been a loss we should have had to make it good. But we exempt ourselves from the other side of the rule, that where profit results from it we are not entitled to make a profit for ourselves out of the management of funds of which we are trustees. I am not at all sure that it is right or wise for the legislature, acting on behalf of the State, to seek to alter the general principles of trust law in cases where it happens itself to be the trustee. I do not know whether these considerations were brought to the notice of the Public Accounts Committee which came to the conclusion that nobody was entitled to benefit. I wonder who gave them that advice. We ought, at any rate, if we decide to do this, to know exactly what we are doing.

12.48 a.m.

Mr. Benson: There is one question I want to ask. I notice that, according to the Order Paper, if this Bill is passed, it


is proposed to send it to a Select Committee for the purpose of examination. The Bill looks so comparatively simple, despite the views of my hon. Friend who has just spoken, and the principle seems so very obvious that I am rather at a loss to know why it should be proposed to send it to a Select Committee for purposes of examination.

Mr. Pritt: This Bill seems to me to infringe very substantially all strict rules regarding the administration of trusts and the duties of trustees. It seems to me, further, to be an attack on the sacred rights of property, and, further, to do substantial justice. On those three grounds I support it.

12.49 a.m.

Mr. Davidson: I regret having to intervene again, but it seems that important business is always brought on at night, and the Financial Secretary to the Treasury is always chiefly interested in this late legislation. As a matter of fact, he could almost be described as the night watchman of the Government. I noted with very great attention that the right hon. and learned Gentleman said that the Treasury had always been prepared to stand any loss and, therefore it was only right that, should a surplus accrue, the Treasury should have that surplus. I wholeheartedly agree with that principle. What I would like to have from the Financial Secretary to the Treasury is his assurance that in the event of such surplus accruing it will be used to fulfil some of the things he has failed to do up to the present with regard to old age pensions.

12.50 a.m.

The Attorney-General: I would like to answer the question put by the hon. Member for Chesterfield (Mr. Benson). The reason why the Bill is to go to a Select Committee is because it is what is termed a hybrid Bill and may affect private rights. As regards the remarks of the hon. Member for Nelson and Colne (Mr. Silverman), I appreciate what he said. He will appreciate that the increased rate of interest could only be earned by aggregating the funds. If the strict letter of the law had been observed it would have been impossible for the higher amount of interest to be paid.

Bill committed to a Select Committee of Seven Members, Four to be nominated by the House and Three by the Committee of Selection.

Ordered, That all Petitions against the Bill, presented at any time not later than five clear days after the Second Reading of the Bill, be referred to the Committee.

Ordered, That Petitions against the Bill may be deposited in the Committee and Private Bill Office, provided that such Petitions shall have been prepared and signed in conformity with the Rules and Orders of this House relating to Petitions against Private Bills.

Ordered, That the Petitioners praying to be heard by themselves, their Counsel, or Agents, be heard against the Bill, and Counsel or Agents heard in support of the Bill.

Ordered, That the Committee have power to send for persons, papers, and records.

Ordered, That Three be the quorum. — [The Attorney-General.]

WAYS AND MEANS.

Considered in Committee.

[Sir DENNIS HERBERT in the Chair.]

PUBLIC TRUSTEE (GENERAL DEPOSIT FUND).

Resolved,
That, for the purposes of any Act of the present Session to amend the law with respect to the manner in which the public trustee may deal with certain trust moneys to confirm the legality of certain dealings by the public trustee with such moneys and to require certain moneys in the hands of the public trustee to be paid into the Exchequer, and for purposes connected with the matters aforesaid, it is expedient to authorise the payment into the Exchequer of all such sums as may become payable into the Exchequer under the said Act." — [The Attorney-General.]

Resolution to be reported To-morrow; Committee to sit again To-morrow.

GAS UNDERTAKING ACTS, 1920 TO 1934.

Resolved,
That the draft of a Special Order proposed to be made by the Board of Trade under the Gas Undertakings Acts, 1920 to 1934, on the application of the Urban District Council of Ilkley, which was presented on the 23rd day of February and published, be approved.

Resolved,
That the draft of a Special Order proposed to be made by the Board of Trade under the Gas Undertakings Acts, 1920 to 1934, on the application of the British Gas Light Company, Limited, with respect to the Fenny Stratford undertaking of that Company, which was presented on the 23rd day of February and published, be approved.

Resolved,
 That the draft of a Special Order proposed to be made by the Board of Trade under the Gas Undertakings Acts, 1920 to 1934, on the application of the Knottingley Gas Company, which was presented on the

27th day of February and published, be approved." — [Mr. Cross.]

The remaining Orders were read, and postponed.

It being after Half-past Eleven of the Clock upon Monday evening, Mr. SPEAKER adjourned the House, without Question put, pursuant to the Standing Order.

Adjourned at Four Minutes before One o'Clock.